The Ministry of Finance revealed yesterday that Guyana has received approval from the Islamic Development Bank (IsDB) for a loan of US$20M for the Guyana Power and Light (GPL) Utility Upgrade Programme. The Ministry noted that the loan will help GPL to effect a comprehensive turnaround of its electricity distribution.
This loan is the first sum to be disbursed from the resource envelope of US$900M that was extended to Guyana by the IsDB in 2017. Guyana has already benefitted from two grants from the Bank totalling more than US$500,000.00.
The Utility Upgrade Programme is part of GPL’s Development and Expansion for the period 2014 to 2021 which aims to reduce the overall losses in the power system. The loan is expected to cover several expenses for the Programme.
These include: the rehabilitation of 153 km of GPL’s medium voltage and low voltage network and 6,941 smart meters, including the associated transformers, service lines and distribution boxes; and the rehabilitation and extension of two 69/13.8KV substations at Kingston and Vreed-en-hoop.
The loan will also finance consultancy services for the preparation of designs and specifications for the sub-stations and the site supervision for the works related to the Kingston and Vreed-en-hoop substations, as well as support the existing project management unit by financing additional specialised engineers and technicians to reinforce the existing team.
GPL is the Executing Agency for the project and will operate under the aegis of the Ministry of Public Infrastructure.
Minister of Finance, Hon. Winston Jordan will sign the Agreement with the IsDB on September 19, 2018 in Saudi Arabia. Since becoming a member of the Bank, Government has been aggressively pursuing projects that will increase Guyana’s infrastructure and optimise its productivity in the areas of agriculture, trade and competitiveness and human and rural development having committed to the diversification of Guyana’s economy in preparation for first oil in 2020.
The Guyana Power and Light has long been challenged by its inability to provide a reliable supply of electricity and suffers high levels of losses. This has been compounded by a rapid increase in demand for energy by residential and commercial users.
The GPL Utility Upgrade Programme is co-financed by the Inter-American Development Bank and the European Union, and upon completion will reduce losses, realize a more efficient and reliable service, and deliver a better quality of electricity for households and commercial users.
It was only yesterday that this publication reported on the concerns of the International Monetary Fund (IMF) as it relates to the financial health of the Guyana Power and Light.
According to the Fund, the reliability of electricity in Guyana continues to be low and it is linked to technical and institutional deficiencies GPL. The financial institution said that GPL’s technical losses in electricity transmission are about 10 percent, while commercial losses are about 30 percent.
What was also troubling to the Fund was the fact that GPL reported a loss of US$3M ($600) last year. The Fund said that GPL has turned to the government for financial support to upgrade its power generation and electricity grid so that it can be able to increase reliability and meet the growing energy demand. The Fund noted however that any significant investment that is being requested by GPL would likely require additional borrowing or a Public Private Partnership (PPP) arrangement.
Minister of Public Infrastructure with some responsibility for energy, David Patterson, acknowledged that indeed, GPL is facing financial constraints.
Patterson said that since last year, GPL has been grappling with rising fuel prices but it took a decision not to pass it on to consumers. He said that this is the reason for the company sustaining $600M in losses.
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