THE Guyana Power and Light Company (GPL) says its plans for the future will quickly build on the progress it has made to date, but are dependent on its ability to raise debt financing.

This ability is contingent on the revenue stream provided by the tariff-setting mechanism enshrined in GPL's licence, the company noted in a 70-page document presented to the watchdog Public Utilities Commission (PUC) Tuesday.

The mechanism provides for the generation of cash to repay loan capital, plus interest, and a return on investor equity.

According to GPL, if the tariff-setting mechanism is undermined, directly or indirectly, it will be unable to assure lenders that it will be able to repay loans. It said the company's development and service improvement programmes will then be put at risk since there are no feasible alternative sources of cash available to fund these programmes.

GPL had submitted the document to the PUC during a hearing the Commission called for the company to answer charges relating to several consumer complaints regarding the quality of service it provides.

The parties met at the Hotel Tower in Georgetown and consumers were given the opportunity to air their concerns about GPL's operations.

The company was required to answer to the alleged 40% losses it suffered in its operations, the outages and load shedding occurring within the system, both scheduled and unscheduled, and whether it has been providing safe, adequate, efficient and reasonable service to the public.

GPL had, however, submitted the document to the PUC, which said it will examine it before continuing the hearing. The date of the other hearing is to be fixed and announced.

In three sections - property and maintenance, losses reduction, and supply continuity - GPL in the document proposes to present evidence that demonstrates it has made reasonable efforts to maintain its property and assets with a view to improving the quality of supply to consumers on a sustainable basis. It said it has made best efforts on loss reduction and that the quality of supply is improving and will continue to improve.

Consumers at the hearing, however, charged that the company has failed to live up to its obligations.

Among the persons raising concerns was Mr. Ramon Gaskin, former Chairman of the dissolved Guyana Electricity Corporation (GEC), who noted that GPL has made significant losses over the years.

He accused GPL of not providing efficient service, referring to commercial and non-commercial losses in the system since the company took over the GEC operations. He said the losses are increasing rather than decreasing.

GPL reported in the document that the profits earned in the past three years were significantly lower than the Allowable Return and that to date the strategic investor has not received any return on its investment due to the low levels of profits made.

It said in 1999 the company made a loss of $448M before interest and taxation due to rising oil prices after tariffs for the period had been agreed. Interest charges were $78M.

It said in 2000, GPL made a profit of $737M before interest and taxation with interest charges at $272M. GPL said this is due primarily to the fuel costs being $1.0Bln higher than the tariff projected costs, whilst the fuel surcharge applied to consumers resulted in GPL collecting only an additional $270M in revenues.

The company last year made an interim profit of $395M before interest and taxation, which is significantly lower than the previous year, with interest charges at $180M.

GPL said the 15.89% tariff increase now requested is due to the increase in fixed assets and construction work in progress, sales revenue shortfall, increase in employment and other costs.

It said the company does not have unused cash resources and that all expenditures must be made from these sources.

According to Gaskin, by the end of the first year, the company should have reduced commercial and technical losses to 34% and by the end of year two, to 29%.

He said losses in the system have a profound and direct impact on revenue, cost of production and tariffs and accused the company of failing to meet its obligations. He charged that the company should not be granted tariff hikes noting that it wants to recoup from the consumers, losses due to mismanagement.

"...growing losses, higher tariffs. It's bad management. And then all the time they are looking for higher rates to cover this gap", Gaskin stated.

He noted that due to the licence requirement regarding how revenues are to be protected, tariffs have to be boosted to meet that requirement.

Gaskin said if the company had done what it was supposed to there would have been absolutely no reason for increased tariffs.

Speaking for about one hour in an effort to enlighten both the PUC and the gathering of consumers on GPL's operations, shortcomings and failure to comply with its obligations as stipulated in its license, Gaskin also accused the company of failing to meet targets in transmission, distribution and generation, failing to adhere to international accounting principles, and failing to carry out development works, among other things.

"...one can say without any fear of contradiction that in terms of generation, it was not done", he stated.

Gaskin charged that the company has not been providing safe, adequate, efficient and reliable service to the public, noting that the solution to the problems being encountered is to fix the system and not to keep demanding higher rates.

GPL said it has made significant improvements to its generation assets, including the introduction of scheduled maintenance programmes, refurbishment of units at Canefield, introduction of 16.4 megawatts of mobile high speed generation, and scheduled return to production on Unit 2 in Garden of Eden.

The company also listed a number of works done to improve transmission and distribution, pointing out that when it took over from GEC, it took possession of an ageing and degenerating transmission and distribution system.

It referred to the five-year development plan for 2001-2005, which was finalised in 2000 towards the addition of generation capacity, expansion of the transmission system, and strengthening of the distribution system.

"GPL has undertaken extensive work to improve our assets and improve supply - at the generation, transmission and distribution levels - and considers that we have complied with the requirements of Section 25 of the PUC Act of 1999 and the terms of our agreement", the company stated.