GEC deal may be concluded in two weeks
THE privatisation deal for the Guyana Electricity Corporation (GEC) should be concluded within another two weeks, Prime Minister Sam Hinds said yesterday. Speaking with the Chronicle after a function at the Guyana National Service (GNS) Sports Complex, Georgetown, Mr. Hinds said many details still have to be fine-tuned before the final agreement can be signed. "There are about 60 tasks...we're rushing to do that, so it's two weeks of foot slugging to get it all done," he explained. The Government majority in Parliament last week passed two bills regulating the legal framework for the privatisation of the electricity company. The main opposition People's National Congress (PNC) and the leader of the Alliance For Guyana (AFG) walked out of the Parliament, in protest at the two pieces of legislation. The Prime Minister who has responsibility for the power sector, debated the Electricity Sector Reform Bill 1999 which preceded the Public Utilities Commission Bill 1999. Only The United Force (TUF) stayed to register formal opposition to the Bills. "Our GEC needs much fixing immediately. Electricity supply in Berbice may get worse before it gets better. "There is need to proceed expeditiously. We have been at this task for well over three years," Mr. Hinds told the House. "We have a good partner in CDC/ESBI (Commonwealth Development Corporation and the Electricity Supply Board International of Ireland) who would deliver an electricity supply, not for free, maybe not what we may like to pay, but at the lowest possible sustainable prices and no one can do better than that", he argued. Mr. Hinds said that although the Government has not been unmindful of the calls for copies of the agreements and licences entered into with CDC/ESBI, the documents were not necessary for the passage of the Electricity or the related Public Utilities Commission Bill 1999. He promised that the agreements and the licences granted to CDC/ESBI will be laid in the Parliament, before these come into effect. The Privatisation Unit on Friday released the deal summary for the privatisation of the GEC, outlining the main terms of the legal agreements to be entered into with the overseas investor. The release stated that most of the assets of GEC will be transferred to the new Guyana Power and Light Incorporated (GPL). GEC's employees are to become GPL employees and will maintain all of their accrued benefits with the existing labour agreements. The agreement states that the Board will comprise five directors, two each nominated by the Government and CDC/ESBI, and the fifth to be selected from a list of two candidates provided by the investor. The "outside director" cannot be an officer, employee or director of the investor or any of its affiliates. Ownership at the start of GPL is to be on a 50/50 basis between the Government and the investor. But after the first two years, five per cent of the common shares of GPL are to be offered under a "private placement" to private and public institutions. And within five years, a further 15 per cent of the common shares of the GPL are to be divested in an "Initial Public Offering" (IPO). Under the IPO, employees of GPL will be given an opportunity to invest in the new company. A Guyana dollar rate of return of 23 per cent pre-tax and 14.9 per cent after tax is to be used as the target for determining tariffs. The investor is to manage GPL under a ten-year contract and the company will pay income tax at 35 per cent with no tax holidays. GPL's rates for this year and next year will include a headline rate and actual rate consisting of GEC's full cost of providing the service and rates charged to customers, respectively. The rate structure was agreed to and signed in late 1998 by a quadripartite committee comprising the Government, the private sector, the consumer body, and the trades union movement. (MICHELLE ELPHAGE)
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