Noting the importance of reliable energy to ensure economic growth, the Inter-American Development Bank (IDB) has taken note of Guyana’s efforts to close the energy gap between urban and rural communities, while also highlighting areas for more to be done.
The IDB recently released its Caribbean Quarterly Economic Bulletin, which deals largely with digital infrastructure and development in the Caribbean. According to the IDB, infrastructure and energy challenges remain an obstacle to developing industries in Guyana.
“Infrastructure challenges in terms of transportation, energy and telecommunications continue to represent significant obstacles for Private Sector development in Guyana. High energy costs and reliability are major challenges,” it said.
“The average tariff for electricity in Guyana is US$0.30/kilowatt hour (kWh), representing one of the highest rates in Latin America and the Caribbean, where the average tariff is US$0.18/kWh,” the IDB further said.
There has been developmental progress, as the IDB noted that access to energy has expanded over the last decade. According to the institution in its report, the access to energy gap between urban and rural communities in Guyana has steadily closed, to the point where access to energy has increased to 92 per cent.
IDB drew reference to the fact that members of the Organization for Economic Co-operation and Development (OECD), which are mostly high-income countries, had energy coverage of 100 percent over the same period. This, the IDB said, is according to the World Bank’s World Development Indicators.
“Access to energy (in Guyana) has expanded over the last decade, increasing from 79 percent in 2008 to 92 percent in 2018, while over the same period in Latin America and the Caribbean as a region, it increased from 90.5 to 96 percent, and in the Caribbean as a sub-region it increased from 94 to 98 percent.
“In Guyana, the gap between urban and rural communities has narrowed, but the widespread use of generators to supplement transmission, and reliance on heavy fuels for power generation represent a significant cost to the economy,” the IDB further explained.
The People’s Progressive Party (PPP) Government has been pursuing an ambitious plan to introduce an energy mix of solar, wind, hydro and natural gas, which would see some 400 megawatts of new power added to the National Grid.
The flagship initiative of Government’s plan is the gas-to-shore project. Estimated at a cost of some US$900 million to build, the gas-to-shore project is a game-changing initiative that would see excess gas from the Liza Field offshore Guyana being piped onshore to generate power.
The main objective of the initiative is to transport sufficient natural gas from the Stabroek Block’s petroleum operations to supply some 200-250 megawatts of energy to the National Grid, leading to a significant reduction in electricity costs.
President Dr Irfaan Ali had previously said the gas-to-shore pipeline, which will land at Crane on the West Coast of Demerara (WCD), would lead to “big industrial development taking place there that is linked to not only power generation and a power plant.” He had also said the investment on the Demerara River shoreside would create massive opportunities and a trickle-down effect, especially for Region Three.
Prime Minister Mark Phillips, who has responsibility for the energy sector, has also previously said Government is looking to produce 200 megawatts of power from the gas-to-shore project by 2024.
Another major project on Government’s energy agenda is the revival of the Amaila Falls Hydro Project (AFHP), which is the brainchild of the previous PPP administration, but was shelved soon after the former A Partnership for National Unity/Alliance For Change (APNU/AFC) Government had taken office in 2015.
In November of last year, it was announced that the Cabinet granted its “no objection” for the Office of the Prime Minister to engage China Railway Group Limited to construct the 165-megawatt Amaila Falls Hydropower Project.
The construction of the AFHP will be based on a Build-Own-Operate-Transfer (BOOT) model in which the company would supply electricity to the Guyana Power and Light (GPL) Inc at a cost not exceeding US$0.07737 per kWh, and where the company would provide the entire equity required by the project and undertake all the risks associated with the project. (G3)