Guyana Power and Light Inc (GPL) raked in $10.5 billion in sales last year of which $9.3 billion came from consumers and $1.1 billion from the government subsidy of the headline rates.

Government subsidy of the headline rates ended last year. There was additional miscellaneous income of $102 million, taking total income for the year to $10.6 billion.

The company made an after tax profit of $188M for the year which had to be offset against the accumulated losses of $140 million at the end of 2000. Its end of year accumulated profit was $48.1M. GPL spent $4.8 billion in fuel and freight representing 54.6% of its income.

The management accounts showed a $1.6 billion deficit in the amount of revenue mandated under GPL's allowable rate of return of 23%. This deficit is what has triggered the proposed tariff hike of 15.89% from the start of this month. That tariff hike is now the subject of controversy with the government questioning it and the Public Utilities Commission being asked to review it.

According to the accounts which were released at a recent press conference, an operations and maintenance contract cost the firm $937 million, whilst repairs and maintenance cost $307 million. Usage fees were $207 million, taking operating costs to $6.2 billion and leaving $4.3 billion as gross income.

Fixed expenses totalled $3.9 billion and consisted of the controversial management contract fee of $437.2 million, directors' fees of $13 million, employment costs of $1.4 billion, rates and property taxes of $52 million, bad debts of $422 million, a loss on exchange of $15 million, the assessment and licence fee by the Public Utilities Commission of $25 million and transmission and distribution repairs plus maintenance costs of $136 million. There is also a cost of $724 million attributable to administration and depreciation charges of $662 million.

This leaves an operating income of $379 million, to which interest of $15 million had to be added, realising an operating profit and other income of $394 million. After interest charges of $180 million are deducted, however, the net profit before tax is $214 million. Taxes payable are $25 million, taking the profit position to $188.6 million. This decreases further to $48 million because of the accumulated losses brought forward.

The allowable rate of return to the foreign shareholder, the Commonwealth Development Corporation (CDC)/ESB International, is $2.1 billion. When this is taken from the net operating income of $441 million (excluding property taxes) it yields an interim deficit of $1.6 billion which GPL is trying to bridge with the tariff increases.

However, the allowable rate of return is calculated on the basis of the weighted average cost of equity and debt. The equity used in the computation is the total equity of the company and not just the equity injected by CDC/ESBI implying that a portion of the deficit to be made up should accrue to the other shareholder in GPL - the government.