The power company has budgeted US$100M over the next five years for capital works - mainly for the shaky transmission system and new generation - and it has conceded that technical and commercial losses are probably at the same level of two years ago.

Guyana Power and Light (GPL) - 51% owned by the Commonwealth Development Corporation (CDC) and ESBI of Ireland - has come in for stinging criticisms from all sectors of society over its performance since it took over from the rundown GEC just over two years ago.

On Friday, the company took possession of six 1.6 megawatt generators which will be deployed in Demerara and Berbice and which should take care of one of the immediate concerns i.e. generating capacity during the peak Christmas period.

Simultaneously, the company has begun to look at curbing line losses and has started a pole replanting exercise which includes minor repairs along the transmission and distribution system to allow for the flow of power.

In a recent interview, GPL's Chief Executive Officer, John Lynn told Stabroek News that because there is no worthwhile 69 KV network, the distribution system cannot be divided to allow for a reduction in electricity losses during transmission. This therefore reduces the amount of power available for consumption.

Former chairman of the power company, Ramon Gaskin, has accused the current managers of breaching the terms of their contract by failing to reduce technical losses.

In an assessment of the company's performance since October 1999, which was shared with the government and the private sector, Gaskin said technical losses should have been reduced to 34% from around 40% at the end of the first year and then to 29% at the end of the second year since privatisation. However, Gaskin said at the end of year one, technical losses were 39.3% and for the first nine months of this year remained at 39%.

He pointed out that the gross annual potential revenue of GPL this year is some $15 billion and the 10% loss the company is unable to staunch is costing $150 million.

The technical losses occur as a result of line deficiencies.

The company reportedly produced 449 million kwh for the first year but only billed for 287.9 million kwh and for the nine months this year produced 350 million mwh but billed for 216.5 million kwh.

Asked about this situation, Lynn said he did not wish to comment but said that the company is currently reviewing all aspects of the losses.

He said that some factors have caused commercial losses due to energy thefts and defective meters to be reduced whilst others have caused technical losses to rise. This includes an increase in generation of 13% since the new managers took over.

"Currently we have measurements being taken and studies are being done to validate the original assumptions and the current position," Lynn said. He conceded that the commercial and technical losses are probably at the same level as they were two years ago since the improvements and deterioration balance off.

Lynn said these losses will be tackled via a two-fold strategy. He said on the commercial side, the company intends to intensify its programme of inspecting consumers' installations to detect and eliminate the unauthorised use of electricity. Simultaneously, the company would be investigating what actions need to be taken to reduce technical losses in the short run.

The company has budgeted US$100M over the next five years in capital expenditure of which 75% is to go to improved transmission and new generation. The process has started with the company going to international tender for suppliers.

Lynn said the plan is to put in three 10-megawatt machines at the Garden of Eden on the East Bank of Demerara over the next three years. The company has already begun to invite tenders for their supply. He disclosed that the two eight-megawatt stations at Kingston will be phased out with the first one expected to go in 2003 and the other in 2004. The machines would be dismantled and used for scrap.

The top man at the company said work will start next year on a new transmission network for Eccles and to upgrade the Garden of Eden and Sophia networks as well. And over the next three years new transmission stations will be built at Coldingen on the East Coast, Leonora on the West Coast and Williamsburg on the Corentyne.

Lynn said the generation shortfalls and the problems with the transmission and distribution network are the two main reasons for the outages. The new generators which arrived Friday would allow for a stabilisation in the situation.

"We are looking forward to a bright Christmas and a better 2002," Lynn told Stabroek News.

Asked whether the criticisms over the company's performance are justified, Lynn said he understands the basis for these and added that it is sometimes difficult to convey to the public what the company is doing to solve the problems. However, he assures the public that everything is being done and will be done to make the necessary improvements so that Guyanese consumers can have the quality of service that they expect in the shortest possible time.

Gaskin has been critical of the rate increases in recent times especially as there has not been a commensurate improvement in service arguing that consumers are being asked to subsidise inefficiencies in the system.

The former Guyana Electricity Corporation (GEC) chairman argues that if the US$23.45 million equity investment by the foreign partner, CDC/ESBI, had been paid in full, there would have been money to invest to improve the transmission and distribution network. Gaskin said CDC/ESBI has only injected US$15 million as equity over the last two years but has taken out US$7 million in fees and interest.

Lynn pointed out in response that the equity price was to be paid over 36 months and that schedule is being adhered to. He said the final instalment of US$3.45M is to be paid next year. He added that there are no interest charges as CDC/ESBI has not lent the company any money. Lynn said that the management fee is about US$3.7 million annually but no dividends have been paid to date and CDC/ESBI has not earned any returns on its investment in the first two years.

He denied Gaskin's claims that the oil price hikes are not responsible for the steady increases in tariffs but rather the formula employed to guarantee the foreign partner its rate of return.

Lynn explained that the formula looks at the gap between income and expenditure and if the gap is more than the returns, then rates go down and if the gap is less than the returns, then the rate goes up. The increases or decreases in rates will occur in the following year.

"Therefore oil prices will factor straight into the rates," Lynn said. Lynn conceded that the rate ignores the fact that approximately 40% of the power production is not billed for.

Gaskin has said that the formula needs to incorporate the agreement by GPL management to cut losses by the end of year two to 29%, arguing it is unfair to reward GPL with higher tariffs while targets are unmet and the situation is worsening.

Gaskin said that if technical losses are acceptable at 20%, then the recoveries will be sufficient to provide electricity to another 25,000 consumers.

He also said that the management fees of US$3.7 million cannot be justified and noted that the foreign directors' expense last year was $30 million.