GPL embarking on $500M maintenance programme
Looking at independent producer for Berbice
By Gitanjali Singh
Stabroek News
June 4, 2003
The power company has embarked on a $500M overhaul and maintenance programme to stabilise electricity supply and is simultaneously looking for an independent power producer to meet the power supply needs in Berbice.
Guyana Power and Light (GPL) is not looking to increase rates in these circumstances, unless there are changes in the variables affecting its cash flow, such as fuel prices and its collection rate. The number of businesses leaving the national grid has reinforced the board’s position of leaving the cost of electricity as its current level. The company intends to have quarterly reviews of the rates with the Public Utilities Commission.
Robin Singh, GPL’s new chief executive officer, said the current analysis indicated that the utility would be able to meet its day- to-day cash requirements over the next three months as well a cover a major part of the overdue maintenance costs without increasing electricity rates.
“Our immediate challenge is to restore generating plants, badly lacking in maintenance, to acceptable operational levels, while ensuring sufficient cash flows to meet supply costs and maintain the cash requirements necessary for our normal operations over the next three months,” Singh told reporters at a briefing yesterday at the GTV 11 studios.
Singh has spearheaded the crafting of an operational plan to stabilise and sustain power supply to citizens now being implemented.
Already, GPL has relocated nine of its 13 1.4-megawatt mobile Caterpillar units to Berbice to boost capacity there and would be seeking out an independent power producer as one of the long-term options for the county. Six of the sets it inherited from the past management team were not in working condition. Three have since been repaired.
Four of the nine mobile base-load units have been positioned at Canefield, East Bank Berbice, three at the No.53 Village on the Corentyne and two at Onverwagt, West Coast Berbice. Another unit is to be repaired and dispatched shortly to take the mobile sets to ten. Because they are base-load units, they cannot be run 24-hours a day, 7 days a week.
Berbice, with a peak demand of 15 MW, was in the recent past only being serviced by one of the two 5 MW Mirrlees Blackstone sets at Canefield and a 2.5 MW set at Onverwagt. This is less than 50% of its peak demand requirement. The Mirrlees Blackstone set in operation is in dire need of maintenance and the other one has been out of service since August.
Singh indicated that the medium/long term options for Berbice include refurbishing the existing sets which may cost US$1.2M; the purchase of new sets to bolster supplies, which would cost some US$4M; or finding an independent power producer.
He said GPL was seriously considering the option of a power purchase agreement for Berbice. Sources have indicated that this is because pressure would be brought to bear on tariffs for the power company if it has to opt for the investment options. Ronald Alli, chairman of GPL, yesterday indicated that it was the board’s policy and determination to maintain the cost of electricity at the current rate which is an average 16% increase over the rate applied in last December. GPL had filed with the PUC a final return certificate showing the need for a 27% increase in rates against the initial filing for 21.68%. However, Alli said that the board had requested a further deferral of the rate increase up to the end of this month when the quarterly assessment would be done.
The Wartsila generating sets at Garden of Eden and Kingston are operated under a maintenance contract with the Demerara Power Company and are in good condition, generating the full 44 MW capacity, Singh reported.
He said the Berbice and Versailles plants were in poor shape because of a lack of maintenance while four diesel sets at Garden of Eden were in questionable states of operational efficiency or overdue for major maintenance. From the latter, only 18 MW of reliable power was available with 5 MW used only in cases of emergency. Once maintenance works were done later this year, Singh said the four sets’ output would increase to about 20 MW.
To meet demand in the Demerara Interconnected system, GPL would have to deploy across the river to Versailles a mobile generating set to meet the peak demand of 6 MW against the installed capacity at Versailles of 4 MW. This is a short-term measure and Singh said a long-term solution had to be identified.
Peak demand from West Demerara is currently supported from the Garden of Eden station but the present link, Singh said, had severe limitations on the amount of power that could be transferred.
Singh expects that with these arrangements, over the next six months, the Demerara system would have sufficient capacity to meet the expected demand of 60 MW. However, he cautions that when the larger units are taken out of service for maintenance, there would be periods of power cuts. These, he said, should not be prolonged. He said power cuts might also arise infrequently from the not fully reliable power transmission line from Garden of Eden to Georgetown which was subject to line trips.
The Kingston steam plant’s two units would stay out of service as each unit would cost US$100,000 more per month to run at current fuel prices than a comparable diesel plant. Singh said these units would not be used unless there was an emergency in the Demerara system.
The power stations in Essequibo, Singh said, were in reasonably good condition except for Wakenaam, which would need to be overhaul by August.
“The progress of much of this overhaul and maintenance programme requires in excess of $500M and would depend on the company maintaining a consistent cash flow. We also have to meet outstanding and inherited liabilities beyond normal operations,” Singh stated.
He told reporters that the company’s inventory level was severely depleted and had to be restored in order to meet the requirements of new connections and for the critical maintenance of the transmission and distribution system.
Alli, GPL’s chairman, indicated that the company was still looking to tap into the US$20M loan from the European Investment Bank and the US$27M from the Inter-American Development Bank (IDB) for the rural electrification programme. The conditions attached to these loans have changed with GPL becoming a publicly owned entity. GPL may have to seek financing from the public to undertake investment necessary to yield efficiency savings to stabilise electricity rates.
The management team has already begun crafting a two-year business plan in the medium term which would address restoring generating plants to full operational capacity, the need to meet current outstanding liabilities to suppliers and creditors and the necessity to substantially reduce commercial losses.
Singh said to tackle commercial losses, GPL would be reviewing the operation of its commercial department to improve customer service, cash collection and to introduce selective replacement of inaccurate meters in the system.
He also said that the 800-odd persons, who had paid for and were awaiting connection, should be connected by the end of July. Payment for new connections would not be accepted until July 1.
Meanwhile, Alli said that considerable capital investment was required to bring GPL’s operations to an efficient technical level and to meet expanding electricity demands. He said the government and the board would have to address this issue in the future.
