Georgetown: The Government of Guyana maintains that it is the budget cut to the Guyana Power and Light (GPL) that has led to the proposed tariff increase by the power company, despite the fact that the Parliamentary Opposition is now claiming otherwise.
Head of the Presidential Secretariat (HPS) Dr. Roger Luncheon reported during Thursdays post-Cabinet press briefing that, “the tariff increase, was fully and properly ventilated during the budget debate in 2013.” He added that the claim remains unconvincing, both to Cabinet and to major stakeholders.
Dr. Luncheon also pointed out that the Opposition’s call for citizens to protest is a parallel with the treatment of the Linden subsidy in the 2012 budget and is instructive.
He highlighted the Opposition’s demand then that there be no reduction in the Linden subsidy and as such no tariff increases. This clearly established “the clear linkage in the tariffs that are preserved, and the avoidance of increased tariffs for GPL customers.”
The HPS stated that by understanding that GPL customers are deeply concerned about the proposed increase in tariff, and that they are caught by the consequences of the parliamentary opposition intrigues of the GPL subsidy; “the President and the administration have proclaimed their intention to undo the budget cuts and to mitigate the impact of the cuts.”
Dr. Luncheon also observed that the urgency is obvious and goes beyond GPL customers.
“As we sit here, public officers have not been paid for the month of May. Each day presents unanticipated financial woes for those officers and their families. Civil society and private entities have weighed in, expressing their concerns and have sought audience with officials of the administration including the President, publicly urging that attention be brought to bear to arrest and to prevent the implementation of the GPL proposed tariff increases,” the HPS stated.
He added that the authorities are engaging the parliamentary political opposition in seeking an urgent resolution of this matter of the tariff increase.
In April, shortly after the GPL subsidy was cut, the power company had indicated that the possible repercussions of the cut had left few options open to the company. The first option would be to increase the tariff and secondly the capital programmes could be cut since most of the funds cut were earmarked for these.
The monies that were earmarked for GPL, $10.2B of which $5.2b was slashed was coming from three funding sources. The first was the continuation of the Chinese Import and Export Bank funds which come to the Government at 2% and long-term tenets; secondly, the IDB again at concessionary rates, and then the Petro Caribe funds, again concessionary.
Concessionary rates are essentially one or two percent with long repayment periods of 20 to 40 years with moratoriums on repayment. The government has opted to use these resources to fund GPL’s capital programme. While it is not easy to seek concessional resources, government has been doing that and GPL has the obligation to repay it over the long – term.
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