He Tuesday told the watchdog Public Utilities Commission (PUC) that the company complies with its licence, which stipulates no linkage between its performance and the licence's tariff setting arrangements.

Lynn also noted that lenders have already expressed concerns about "Guyana risk" (including its economic situation and political climate), which he said is a primary factor that has restricted GPL from raising more debt.

"Any actions that compromise the security of the tariff making mechanism are likely to cause potential lenders to take an even more cautious view about lending than would otherwise be the case," he stated during the company's resumed public hearing before the PUC.

He said the funding to be provided by the European Investment Bank is also at risk in this situation.

The PUC Tuesday resumed the public hearing with the power company but members of the public were absent.

Commission Chairman, Mr. Prem Persaud noted the absence of customers and pointed out that they raise concerns and make complaints but do not pursue these.

The Supreme Court Conference Room was, however, occupied by GPL officials for the second hearing since the PUC called on the company to answer charges relating to several complaints by customers regarding the quality of service it provides.

GPL had submitted a 70-page document to the PUC when the parties met at the Hotel Tower in Georgetown last month giving consumers the opportunity to air their concerns about its 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 the commission has since examined.

The company again submitted a document to the PUC Tuesday summarising its position and offering explanations for complaints and allegations made at the previous hearing.

This, the commission said, it will look into before continuing the hearing.

In three sections - property and maintenance, losses reduction, and supply continuity - GPL in the previous document had proposed to present evidence that demonstrates the company has made reasonable efforts to maintain its property and assets with a view to improving the quality of sustainable supply to consumers.

Among those at that hearing, was Mr. Ramon Gaskin, former Chairman of the dissolved Guyana Electricity Corporation (GEC), who charged that the company had failed to live up to its obligations.

He yesterday walked in just before the adjournment of the meeting and missed the opportunity to ask questions or raise concerns.

Lynn Tuesday reiterated that the company has submitted evidence that it believes demonstrates the company has made reasonable efforts to maintain its property and assets with a view to improving the quality of sustainable supply to customers.

He said the company has made best efforts on loss reduction and that the quality of supply is improving and will continue to improve.

He again noted that GPL has plans for the future, which will quickly build on the progress it has made to date but that these depend on the company's ability to raise debt finance.

This ability, he said, is contingent on the revenue stream provided by the tariff setting mechanism enshrined in GPL's licence. The mechanism provides for the generation of cash to repay loan capital plus interest, and a return on investor equity.

According to Lynn, if the tariff setting mechanism is undermined, directly or indirectly, the company will be unable to assure lenders that it will be able to repay loans. He said in this situation, 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.

In response to statements that shareholders have not made the contractually committed investment in GPL, Lynn stated that such statements are simply wrong and explained that with regard to the contracted private shareholder equity injections, these have been made per the agreed schedule and have been acknowledged by the Government, the other shareholder.

With regard to raising of debt, he said this has been a challenge for GPL which has since raised US$7.3M from Republic Bank of Trinidad/NBIC, funds for new generation amounting to US$3M from Banco de Credito (Panama), and funds from the European Investment Bank (US$17M).

He, however, pointed out that a lot more money needs to be raised which the company is working on, part of which is a review to see if the capital investment requirements can be reduced while still achieving the performance targets. He said this would have the dual advantage of lowering the requirement for funds and reducing the impact on tariffs.

Commenting on the financial status of the company, Lynn said that only marginal profits have been made and cash has been in relatively short supply. No dividends have been paid to the shareholders, he said.

Lynn also touched on factors, which he said have impacted on tariffs, including high prices for fuel and employment costs.

In addition, he listed several GPL achievements over the years, including works in the generation and transmission capacity.

He noted that technical and commercial losses remain "stubbornly high" despite extensive work programmes undertaken by the company aimed at getting losses down without large capital expenditures.

"We have reviewed this approach and now consider that large capital expenditures will be required to achieve necessary improvements", he stated.

Lynn also outlined some of the problems facing the company which he said are more difficult than they realised. He commented on training and staff relations, and losses in the system which he said they are reviewing in order to improve with minimal capital costs.

He said technical losses can only be reduced by large scale capital investments as he noted the company's lack of finances and numerous expenses.