Jagdeo pushes for new GPL deal
-instructs gov’t to pay all arrears
By Gitanjali Singh
Stabroek News
March 21, 2003
President Jagdeo met the principals of AC Power on Wednesday as he got involved in the negotiations to restructure the power company and he expects a final position on the issues by next Thursday.
In relation to the new blackout schedule he said he had instructed that all government arrears should be paid to provide GPL with funds to buy fuel.
Jagdeo said he was assured that the negotiations were an act of “good faith” on the part of the principals but the government was taking steps to put in place a contingency plan in case the investor walked.
The government’s final position on a number of outstanding issues in the negotiations would determine whether CDC Globeleq, the corporation largely behind the investor group AC Power, would stay on as the investor in Guyana Power and Light (GPL) or if it would put its shares to the government and walk.
CDC Globeleq has said publicly that it is not keen on staying on in Guyana mainly as a result of the company’s policy to invest in the emerging portions of the emerging markets. It has also said that investing in Guyana is not for the faint hearted and as an investor, it did not feel welcome here. The company went as far as offering its shares at US$1 to any investor with a bona fide offer and has said it has received a number of expressions of potential interest.
“Yesterday when I confronted the principals of AC Power, they said to me they were still negotiating in good faith. I want to take them at their word,” Jagdeo said when asked if he felt a deal could be struck or whether the talks were meaningless given the explicit position of CDC Globeleq that it wants to bow out of the investment.
The President also indicated that he had given instructions to Minister of Finance Saisnarine Kowlessar, to clear all debts outstanding to the Guyana Power and Light (GPL) to allow it to have finances to source fuel. Jagdeo said this was not to mean that it was the government’s arrears causing GPL to run out of funds to pay for fuel. He said GPL’s debt to the Guyana Oil Company (Guyoil) was significantly more than Guyoil owed the company for electricity.
Two days ago, GPL announced a schedule of six-hour blackouts with some areas scheduled to experience two periods of outages on the same day. This is as a result of the company not having funds to source adequate supplies of fuel for its operations. Jagdeo indicated that the scheduled blackouts could not be sustained and had to end in the short term.
“At this stage, GPL’s survival depends upon the goodwill of the Government of Guyana and the Guyanese people to pay their bills promptly and upon additional support of the Government of Guyana in paying down older receivables and not demanding immediate repayment of outstanding balances due to Guyoil,” West Griffin of CDC Globeleq said on the issue on Monday.
He said if further funds were not forthcoming through either an acceleration of collections or extension of credit through state-owned enterprises, GPL would “likely fail within a matter of weeks.”
“AC Power has been speaking with the government and believes that the Government of Guyana does not want GPL to fail as it is in no one’s interest. It is therefore our hope and belief that the Government will continue to work with GPL to enable the company to continue operating,” Griffin said. However, if the court case blocking the higher electricity tariffs continues into the foreseeable future for GPL, Griffin sees GPL not being in a position to pay for any fuel.
“No investor can consider putting in further funds into a company where the basic framework needed for recovery is not in place,” Griffin said.
Whilst Jagdeo would not be drawn into discussing the details of the outstanding issues, he indicated that one of the issues to be dealt with in the restructured agreement would be the provision for the development of renewable sources of energy.
He noted the pitfalls associated with a heavy reliance on fuel as the source of energy, contending that small countries could be wiped out if its fuel bill was too high. He said Guyana currently has an annual fuel bill of US$100M and this was a big burden. He noted that this pushed up the price of electricity, water, transportation and other services depending on services generated by fuel.
Meanwhile, the arbitration panel is to rule shortly on whether AC Power has to bring in the outstanding US$3.45M in equity or whether the government defaulted on the agreement to have rates effectively implemented for GPL.
This ruling is expected to impact on the talks and Jagdeo said he expected by the time he gets back from a state visit to China, that a decision would be taken on GPL’s future.
