The Guyana Power and Light (GPL) has clinched a US$18 million loan from the European Investment Bank (EIB) to improve its generation and transmission system and the firm is looking for a further US$44 million to get that project off the ground.

Chief Executive Officer, John Lynn, said yesterday that he expected all the financing to be in place by the end of March and highlighted as the company's two top priorities 30 megawatts of new generation for the Garden of Eden station and setting up a substation at Eccles.

The company has to secure all of the financing for the project before the 15-year loan from the EIB is disbursed, the terms of which include a variable interest rate of between three and ten per cent depending on the company's performance and five years grace before capital repayment starts.

Lynn would not discuss the other sources of financing being sought, saying these were confidential. However, Profile II of the Rural Electrification Project on the Inter-American Development Bank (IDB) website said the company had completed negotiations for loans with the EIB as well as the local agent of Republic Bank of Trinidad, the National Bank of Industry and Commerce Ltd (NBIC). The loan with NBIC is for US$7.3 million over a ten-year period with a two-year grace period and interest at one per cent above Republic Bank's US account prime rate. The IDB had also declared GPL eligible for financing, via its private sector window, in 1999. Lynn refused to say whether GPL had to provide any of the funding for the project.

A statement from GPL yesterday on the loan agreement with the EIB said the firm did not have to provide security, but one of the conditions was that the loan must be matched by corresponding funds. "GPL is currently working to raise the additional financing for our major projects," the statement said.

Over five years, the project will see three new medium-speed, heavy fuel oil-fired diesel units of ten megawatts each installed at Garden of Eden, as well as a new 69 KV line linking a new 13.9 KV substation at Eccles to the distribution network. Lynn expects that work on these two top priority areas would be completed in 12 months.

Among the other work to be undertaken in the period are a 69 KV interconnection between Sophia and Onverwagt to link the Demerara and Berbice systems, with modifications to the Onverwagt station. There will be new transmission stations at Coldingen on the East Coast, Leonora on the West Coast and Williamsburg on the Corentyne.

Further, there would be a new 69 KV line from Sophia to Kingston and a new transmission station at Kingston.

Lynn said he anticipated that contracts would be placed with suppliers by the end of the first quarter, by which time all of the financing would have been arranged. He was positive about securing all of the financing for the project by this time.

The CEO said he expected that with work completed on the two top priorities identified, generation will become more reliable; the firm would be able to cope with increasing demand averaging five per cent per year; reliability in supply would be assured and technical losses would be reduced. He could not say to what extent improvements would be made with regard to technical losses.

"We hope to gradually reduce blackouts on a continuing basis. It will be impossible to stop all blackouts but we hope to get to the stage where it happens very seldom and this will be a gradual process," Lynn said.

And while the two top priorities would be worked on, Lynn said that the company would continue to improve the distribution network, replace rotten poles and maintain reliability of supply which was seen in the last few months.

Lynn noted that since August there had been no kinks in the system causing blackouts, but rather there had been planned blackouts to improve the system.

"We want to build on that. There will be switch outs to allow for improvements and we are working to ensure a gradual process of improvement," he asserted.

He saw the loan from the EIB was a vote of confidence in GPL and a building block to allow the major projects to proceed to improve substantially the quality of electricity supply.