Ending Wartsila contract seems ill-advised at this time, there should have been public invitation for wind power proposals

Dear Editor,

The growing power problems of the last two weeks have been giving me nightmares: are we stepping back to the 70s and 80s? And the talk about ending the operations and maintenance contract with Wartsila, and a sole-sourced Wind Farm with Mr Lloyd Singh: are we, GPL and the customers, being set up to be exploited?

Adequate provisions for electricity in a small but growing economy like ours needs constant knowledgeable and appropriately experienced attention, with regular, timely and economic investments to stay ahead of growing demand and to allow for the ageing of the installed equipment, both generation and distribution. Of course the quantities of money available to GPL, the cost of fuel and the ability and willingness of customers to pay are important considerations.

The damage to the cable crossing the Demerara River (it is said by their own dredging contractor) must be considered a great failure at all levels of GPL. How did it happen? Everyone knows that there is an underwater cable and GPL knows exactly where it is and should have had sure methods of avoiding its damage. Also, thinking of the number of days being taken to find a suspected fault on the five (5) kilometre line linking Kingston and Sophia one wonders whether GPL, including its Board, are not already stretched. There is word about other incidents being kept quiet. That is why the talk of ending or changing the operations and maintenance contract with Wartsila seems ill advised at this time, when it doesn’t appear that the Board and Management of GPL are ready to take on additional load; nor can I imagine GPL ending the contract with Wartsila to hand it to any other.

Losses, both technical and commercial, have been the big problem of our electricity sector. A few years ago one IDB consultant produced and we published the losses for the geographical areas of some thirty feeders. The great variation in commercial losses was brought before the public and I believed that keeping this focus with half-yearly determinations and publications of the information would put limits on what individuals inclined to stealing electricity would do or be allowed to do. I am very disappointed and consider it a great mistake that this programme has not been pursued.

With the IDB looking over our shoulders and differing with them any number of times over some twenty plus years, systems were developed for the good management of GPL. One of the most important is the requirements and practice of submitting each year to the Minister and

the Public Utilities Commission (PUC), the rolling five-year development and expansion (D&E) plan, with a fifteenyear perspective added later. The development of the Amaila Falls was our fifteen-year perspective. The need for new, comparatively small Heavy Fuel Oil (HFO)- fuelled gen sets for new generating stations at Bartica and Anna Regina were evident and urgent. After our first discussions with Wartsila we wondered whether the small, 1.0 to 2.5 MW, units required had not fallen below Wartsila’s economic range and looked further afield to the 1 MW unit being installed (then) by RUSAL (they use the larger Wartsila units at other locations) and the 1 MW Hyundai unit at Banks DIH Thirst Park. I contemplated a selected tender process, inviting Wartsila and at least these two others to bid for the gen sets (with auxiliaries) for new stations at Bartica and Anna Regina. We also contemplated that the next large station, five years or so further on, would be at the Canefield location (outside of New Amsterdam).

The fact is that except for studied and selected hydro sites (such as Amaila), renewable energy highly desirable as it is, and it is the energy of the future, is still generally today not directly competitive with fossil fuels. The people of the developed countries, much richer than we, have been knowingly providing premium (higher) prices (which they could readily afford) for energy/electricity provided from renewable sources, so as to meet their commitments to lower their total and per capita carbon dioxide (CO2) production.

Our own Guyanese figures are so low, we are way below such requirements; there is no need and no economic justification for us preferring more overall expensive renewable energy; diesel units would have to be installed anyhow to back up the renewable energy sources of solar and wind.

Looking back now, there can be no doubt that the calls by the new Coalition Government for a green Bartica and a green Guyana were not fully informed and created confusion so that Bartica and Anna Regina (Essequibo Coast) have been suffering electricity outages of about twelve hours per day and there will likely be a fifteen-month delay in providing an economic, reliable supply of electricity. This evident misinformation and misjudgements of the Coalition Government deepen concern about whatever arrangements would be made with whomsoever for the Wind Farm at Hope Beach or elsewhere (or other renewable energy).

With our current income levels and where we are at in Guyana, lowest lifetime cost should prevail and apart from Amaila, diesel engines are difficult to beat (except in the hinterland and wherever homes are so far apart that the distribution cost is prohibitive). As everyone should recognize, solar and wind do not provide continuous, alwaysavailable power.

It is economic for GPL to pay only for the avoided fuel and maintenance costs discounted by the arrangements to offset/absorb the variations in the renewable energy supply. With such an understanding we of the PPP/C kept our doors open to proposals for solar and wind generation and we would be looking to see that such principles are respected by our Coalition Government (if not, GPL consumers may well end up subsidizing the investors).

No doubt the generation-mix in the long term was something to start thinking about. For the record, on seeing a call from the Government of Japan for developing countries to apply for 1 to 3MW demonstration, utility-grade solar photo-voltaic (PV) plant we immediately applied, prepared and submitted a proposal, but along the way the Japanese Government suspended the programme pleading budget cuts. Also, we kept on extending an MOU first entered into in the late 1990s or early 2000s for a Wind Farm at Hope Beach. In about 2014 Mr Lloyd Singh who had lately become a partner in the company, brought a particularly attractive proposal in which the Chinese Manufacturer was offering about 75% financing at a very low interest rate. It began to appear that a Government guarantee of the loan might be required and shortly after we were told that that Chinese Manufacturer had withdrawn the offer. Mr Lloyd Singh brought another Chinese Manufacturer but it was much more expensive, unacceptably so. Aware that the development of the Wind Farm at Hope Beach whenever it might happen had to be coordinated with our projections for Amaila for a number of considerations, we the PPP/C administration, took a turn towards:

A public invitation for proposals for a Wind Farm (coordinated with our projections for the development of Amaila)

A government guarantee should not be expected to cover any loans.

But by then the 2015 elections were in the air.

As indicated by our Leader of the Opposition, the Coalition Government recognizing the huge conflict of interest in an AFC Minister and Party Executive negotiating a large sole-sourced award with an AFC financier, should have seen an open invitation to tender as a minimum requirement for good governance. We have some protection in that whatever the outcome of the Government’s sole-sourcing negotiations with Mr Lloyd Singh, the law requires the PUC to approve any Independent Power Producer (IPP) agreement which GPL intends to enter into. Public hearings with an open-book presentation are to be expected, disclosing all cost items and in particular the financing and the rate of return of each component of financing.

We, the PPP/C, are proud of how we steadily improved and extended our electricity supply in an economical way and we will expect and accept no less from our Coalition Government.

Yours faithfully, Samuel A. A. Hinds Former Minister Responsible for Electricity and Energy