GEC privatisation deal closer
By Terrence Esseboom
DEAL prospects: from left, Mr. Winston Brassington, Mr. David Bishop, Mr. Seudat Singh of IDS Holdings, Prime Minister Sam Hinds and British High Commissioner, Mr. Edward Glover at the briefing. GUYANA and the power consortium Commonwealth Development Corporation and the Electricity Supply Board International of Ireland (CDC/ESBI) yesterday moved closer to sealing a deal on privatising the state-owned Guyana Electricity Corporation (GEC). Prime Minister Sam Hinds and Mr. David Bishop, Regional Manager of the CDC partner, ratified and exchanged letters of intent on preliminary issues to eventually wrap up the agreement. Outstanding matters are expected to be completed by the end of next month, Mr. Hinds told a gathering, including representatives of opposition parties, business and other groups, at Le Meridien Pegasus Hotel in Georgetown. Under the proposed joint venture, GEC will be renamed Guyana Power and Light Incorporated. A new Board of Directors will be established to assume direct management of the entity, and two pieces of legislation will be enacted to protect the accord. Mr. Hinds said a new Electricity Sector Reform Bill and Public Utility Bill will be taken to Parliament Thursday for ratification. The signatories yesterday were upbeat about the prospects of the deal for the country. "We are confident that we have agreement between the partners which will continue and complete the transformation of the GEC into a reliable and efficient business, providing consumers in Guyana with reliable electricity at reasonable rates which can sustain the GEC, providing all shareholders...with a fair return on their investment," Prime Minister Hinds stated. Bishop said the joint venture partners regard power "as a key industry" vital for an efficient and growing economy where transfer of technology and participation of private sector capital can be supported. He said the deal will provide an "essential service" which can lure future investments in the country. A GEC official who requested anonymity said the agreement with CDC/ESBI was the "key to marketising and industrialising the economy." Mr. Winston Brassington, Head of the Privatisation Unit, said the package was the best the country could broker "to maintain rates at the lowest sustainable level that can be achieved in the circumstances." "There are no losers in this," said British High Commissioner, Mr. Edward Glover, in a press statement after the event. "This is good news for all consumers...the countdown to a fresh start in power supply in Guyana has begun," the statement said. The Government and the foreign consortium commenced negotiations a year ago and after a series of hitches were able to hammer out Share Subscription, Shareholders, Management and Operating and Agency agreements, Brassington told the audience. Under these, the rural electrification programme will continue, and competition in power generation, including hydropower, will be maintained, he explained. Brassington said the arrangement also encourages independent power producers to get involved in transmission and distribution if the consortium is unwilling to do so. The power agreement will abolish government subsidies and loans from the treasury to help maintain the operations of the company. By contrast, the arrangement will allow the Government to eventually receive dividends, taxes and other revenue from the new firm, Brassington pointed out. The deal maintains the two-year quadripartite agreement reached between the Government, the private sector, the trade union movement and the consumer body. It provides too, for a "reputable management" to run the operations and reduce inefficiencies in the system. Users have consistently complained that this contributes significantly to the high cost of electricity here. Consumer advocate, Mr. John DaSilva, told the Chronicle that "...with (anticipated) improvements in the efficiency of the system, there is every good chance that the rates will come down...after (the year) 2000." CDC/ESBI is required to provide US$23.45M for its 50 per cent equity in the company. The money will be given over a three-year period with US$9M in the first year, US$6M the following year and the rest in the last year. The clinching of the deal also means that the Inter-American Development Bank (IDB) can release an outstanding US$30M, part of the US$45M commitment it gave in 1996 to facilitate the capitalisation of the GEC. A statement from the Guyana Power and Light Company said 14 managers and other technical experts are expected here to run the new entity. Bishop told reporters that as part of their duties, they will provide training ventures for locals to "provide employment opportunities." He declined to be drawn on possible retrenchment of existing GEC staff explaining that the consortium was "still in dialogue" with trade union bodies. He assured though that the prospect of what the future holds for GEC employees will compensate for the uncertainties they experienced during the period of negotiation. The deal "is a major investment in a vital sector of the economy," Brassington stated.
|