GPL reports $390M loss
THE Guyana Power and Light company (GPL) says it has lost $390M over a three-month period ending December 31, 1999 and the hike in fuel prices has also cut into its profit this year.
"Despite the injection of US$9M by the AC Power investor, at this time last year, contrary to our plans, most of this had to be used to pay for ongoing operational expenses," Chief Executive Officer, Mr Noel Hatch told the company's annual general meeting last week.
Of the monies pumped into the utility, a significant part had to be used to buy oil to upkeep generators, he said.
"It was apparent that from March 2000 cash shortage difficulties were emerging due to a combination of the significant oil price hike, billing delays and increasing customer resistance to paying larger electricity bills for current energy used, as well as consumption which arose during GEC's operations," Hatch said.
The GPL annual general meeting was held Thursday at Le Meridien Pegasus Hotel in Georgetown.
At the meeting a review was given of the year's activities and the achievements of the company since its start-up on October 1, 1999.
Hatch said attention on GPL's part allowed it to "contain" the difficulties at hand, and by the end of August the short-term problems were largely overcome.
"Another challenge during the year, apart from finding cash up front to order supplies and spare parts, (is that) when orders are placed most suppliers do not view GPL at the top of their priorities.
"Consequently, schedules for the delivery of materials are regularly missed, sometimes very significantly.
"The effect of this has been further public criticism of excessive delays in getting supply, or rectifying an inadequate supply which caused customers equipment to become faulty," he said.
Hatch said apart from AC Power investments, GPL has approached a number of financial institutions for them to source additional funds. But, generally there is a "cautious interest", he reported.
"The detailed discussions bring out the potential lenders' concerns about the socio-economic stability in the country generally. Also, understandably, there is a focus on GPL's cash flows going forward so as to provide assurance of our financial viability," Hatch said.
He noted, however, that the AC Power injection of US$6M was successfully concluded in the past few days, giving GPL a "very welcome and much needed injection of funds."
"...We are expecting to receive imminently, final documents on a US$7.3M ten-year loan from an international bank."
Hatch added: "At the start of our journey on October 1, 1999 there was no doubt that there were very high expectations in the public arena...that the difficulties with the electricity service would be solved almost overnight."
The first year of GPL operations was hinged on "arresting the decline in GEC's (the former Guyana Electricity Corporation) situation" which has been apparent for months if not years, Hatch stated.
"Consolidating our position or regrouping in military terms, would better describe our initial efforts. I do believe...that a good platform for moving forward has been established," he noted.
GPL, as a new entity, had a number of key challenges. The most important was the reliability of electricity supply in the wake of plant failures.
The first of these occurred on the first day of 2000 when major generation set failures happened at New Amsterdam, Berbice and Bartica.
In both cases, about 50 per cent of the customers supplied had to endure extended power cuts, Hatch reported.
Berbice had no electricity for two weeks while Bartica was without power for about six weeks.
On July 1, a control system failure in the Garden of Eden Number 4 Wartsila set caused irreparable damage to the alternator. The set was out of service for nearly two months and a replacement alternator was flown in from Finland.
During this period, a cooling water supply failure from a 500 feet deep well caused GPL to lose supply to the Garden of Eden Niigata Units over a seven-day period.
Hatch said this added to the Wartsila failure and further worsened the extent of the outages around Georgetown.
"Overall and generally there was a large number of other random trips and equipment failures throughout the generating system.
"These were repaired in much shorter time periods ranging from one hour to a day or two," Hatch explained.
He said the problems at generation level can only be permanently solved by significant investment in new generator capacity.
The billing system at GPL proved another major difficulty, Hatch admitted.
"What the customer sees as excessive estimated of consumption (goes) back in many cases for a number of years...
"Given rising tariffs every quarter and the fact that the electricity bill is a significant component in many customers' monthly income, it is easy to see and understand customers' criticisms," he stated.
"As in the generation system failures...January was also an unfortunate month for our billing system.
"Major hardware failures occurred on our server and high speed bill printers that lasted about seven weeks. Bills were not issued, while we tried and eventually succeeded in sourcing replacement of components from abroad.
"A backlog of about two months was added to the inherent one month backlog ad subsequently led to a large number of customers receiving two and in some cases, three bills within a short time frame.
"While we were trying to achieve `catch-up' in the bill issues, a software failure occurred on receipting machines in our Main Street collection centre during all of April and part of May," Hatch said.
He added that this led to very significant queuing time for customers as GPL staffers gave receipts of payment manually - each having to be written for customers.
"Apart from electrical and computer system problems, there were the ongoing supply system failures throughout the distribution system leading to a large number of more localised supply outages, which in some cases were significant and extended over three or four days," Hatch said.
On the upside, Hatch said the shortage of generation in Canefield, Berbice for the last four years is about to be significantly solved with the commissioning of the 5.5 MW unit 3 generator within the next 10 days.
"In Bartica, our efforts over the past six months to purchase additional capacity are about to be realised. Verbal agreement has been reached on the purchase of a 1.1 MW unit to replace and move into standby mode the fully loaded but obsolete 2 x 350 KW generators.
"Sale documents are currently being drawn up," he said.
According to Hatch, GPL's oil reception wharf in Bartica has been rebuilt.
He said modifications are in progress to adjust the distribution system so that all six generators at Kingston can be simultaneously connected to feed into the system.
"This is effectively adding 5 MW of generation to the supply system in Georgetown."
"Our System Development Plan was issued in June covering an estimated programme of about US$80M. Projections are included on an annual basis for system enhancements at all levels of the generation, transmission and distributions systems," Hatch said.
He added: "By the end of August a total of 2,600 new customers had been connected to our system. By the end of September, I believe this figure will be shown to be in excess of 4,000."
Hatch said commercial and technical losses have been reduced from 40 to 35 per cent.
"This was achieved through focus on loss reduction, primarily on our major customers.
"Quite a number of these customers had no meters, defective meters, incorrect meter connections or simply wrong information on the consumption calculation parameters in the customers' master file records," he stated.
Contract meter readers have been recruited and have been operating in Georgetown from October 1. Reading of customers' meters is now monthly in Georgetown instead of every two months.
Quality checks have been built into the billing system to ensure that significant erroneous billing does not occur.
Meanwhile, 20 computer terminals have been added to the Billing and Enquiries areas to support clearance of customer enquiries. Another eight terminals will be added within a week.
A Customer Call Centre has been set up and staff recruited internally. This facility will be advertised nationally.
The general post office is collecting some of GPL revenue and advising it "electronically", Hatch said.
More than 10,000 bills involving G$28M went through during September without any advertising of this facility.
He said these payments were downloaded electronically from Post Office headquarters to GPL's customer master file in Main Street, all within five days of customer payment at post offices located across the country. (SHARON LALL)
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