If the power company had met its required target to cut line and commercial losses there would have been no need for a hike in rates, President Bharrat Jagdeo asserted yesterday.

The President's statement is likely to pile increased pressure on the power company in the wake of its widely reviled plan to raise tariffs by 15.89% effective February 1. It has since been agreed that an eight percent hike will be instituted from February 1 and the full amount in March provided that the company's calculation of its revenue needs is accurate.

Jagdeo also told an Office of the President press conference that his government could not lend support for any power tariff increase unless the planned review of the Guyana Power and Light's (GPL) management contract is completed. The annual US$3.6M fee attached to the contract has been widely criticised.

Jagdeo added that regardless of any other statements made elsewhere, that was the government's position.

The President made these remarks in response to questions about the differing views posited by himself and the Head of the Presidential Secretariat, Dr Roger Luncheon, and Prime Minister Sam Hinds on GPL and the tariff increases.

President Jagdeo also told reporters that he hoped the Public Utilities Commission (PUC), in the exercise of its mandate to monitor the performance of the GPL and to sanction its failure to meet its target, would impose fines that would accrue to the benefit of the consumers. The PUC has the authority to do this but observers have pointed out that the fines are unlikely to compensate for the increases consumers will have to pay.

President Jagdeo said that if GPL had met its responsibility of reducing the technical and commercial losses to 29 per cent from the 40 per cent which now obtains, it would have garnered a further $1.9 billion, enough to cover the $1.7 billion shortfall that the 15.8 per cent rate increase is intended to eliminate.

"From the government side ... we have to look at the increases in [the] light of this information because we can't ask people to pay for inefficiency. It is as simple as that. Any other position that you hear from my government will be subsumed by what I said today."

At a press conference last week, Luncheon had said: "We shouldn't be made to pay increased tariffs for the deficiencies and financial performance of [the GPL] management. That burden should not be thrust on the consumers. This is a managerial deficiency and they are the ones that should be responsible for its impact."

Among the managerial deficiencies, which Luncheon said had been brought to the government's attention was the failure of GPL so far "to live up to projected decreases in the line loss. Evidence does exist to suggest that contrary to the obligations in the agreement, movement is going in the opposite direction and that indeed the company is losing more to non-revenue losses of generating capacity and that has worsened since the company began operations."

At the instance of the Cabinet, Prime Minister Hinds last week wrote to GPL asking for a review the calculations by which the 15.89 per cent rate increase was arrived at. He also cautioned the company about its failure to achieve benchmarks in the management contract, reminding GPL that its failure could have impacted negatively on its revenue.

But at a press conference on Thursday, the Prime Minister defended the agreement with AC Power as the best arrangement Guyana could have secured and can still secure for the power company.

The Prime Minister also raised the issue as to the accuracy of the estimated commercial and line losses on the books of the Guyana Electricity Corporation at the time of its privatisation.

The government is preparing documentation to support its formal request for a review of the management contract under which AC Power manages the utility. Guyana is the 50 per cent partner of AC Power, the parent company of GPL. There is public concern that though the management has failed to meet the benchmarks for reducing the commercial and line losses, the expatriate managers continued to be paid performance bonuses.