Power ship rental: No increase in electricity costs for consumers – VP Jagdeo

– US$1M mobilisation fee, other charges as GPL inks contract with Qatari company

With Guyana having finalised a multimillion-dollar deal for the rental of a power ship to add 36 megawatts of capacity to the national grid, Vice President Dr Bharrat Jagdeo has assured that there will be no increase in electricity costs for consumers.
On Thursday, Guyana Power and Light (GPL) Inc. disclosed that it signed a contract with Qatar-based Urbacon Concessions Investments, W.L.L (UCI) for the rental of the floating power plant for two years.
The state-run power company said in a statement that it has already paid a mobilisation fee to the tune of US$1 million and is not required to pay a demobilisation fee. The contract further requires GPL to pay UCI a fee of 6.62 US cents per kWh as a monthly charter fee for the power ship and a monthly operation and maintenance fee of 0.98 US cents per kWh based on electricity generated.
Under the contract, GPL is also responsible for providing Heavy Fuel Oil (HFO) for the operation of the generators onboard the vessel.
During his weekly press conference on Thursday, VP Jagdeo assured that this deal will not result in any hikes in electricity costs for consumers.
“There will be no increase in the price of electricity because of this rental [of the power ship]…for the next two years,” he declared.
The Vice President reminded that the government has been subsidising GPL to prevent increased costs from being passed onto consumers. Currently, the cost of electricity in Guyana is about 22 US cents per kWh and is said to be amongst the highest in the region.
“The Government is already subsidising the power to people, businesses etc… It’s a large sum of money that we use to keep the price of electricity fixed. Since we got into office, we kept it fix in spite of the increase [in fuel costs]. So, there shall be no in the price of electricity because of this rental,” Jagdeo stated.
The contract between GPL and UCI was signed last Saturday, April 13, and includes the provision of operation and maintenance services as part of the agreement.
According to the state-run utility company, the power ship is slated to arrive in Guyana on May 1, subject to weather conditions and is expected to be fully operational and delivering electricity by May 8.
The floating power plant will be located at Everton in Region Six (East Berbice-Corentyne) and will be interconnected with GPL’s Grid at 69 kV.
GPL said it has already commenced preparatory works at the site to accommodate the power ship and the interconnection to the national grid. The power ship is expected to operate at 96 per cent availability.
Earlier this week, President Dr Irfaan Ali defended the government’s decision to procure the 36 MW of additional power in the face of criticisms about the feasibility of the two-year deal.
The Head of State contended that the move is not only a feasible plan but a necessary one. He pointed out that GPL needs to meet electricity demands and this cannot come via a magical wish.
“You can’t wish that capacity will come and the problem will be solved. We have to buy capacity,” he told reporters on the sidelines of the Local Content Summit 2024 on Tuesday.
The President added, “…we had exponential growth [in recent years]. We have to meet the demand. To meet the demand, we have to buy power. It’s an emergency now. There are very few companies that can give you this power in 15 days. We’ve been able to get this power in 15 days. I congratulate all those who helped us to get here.”
Further, Ali noted that there is a narrative going around that would seek to blame the government for the power outages. According to the Guyanese Leader, however, this would not deter his government from pursuing its goals.
“Some people would enjoy us not meeting the demand because you’d get the free opportunity to go on social media every day. We take ownership. We take ownership of what we inherited and we take ownership of the problem. But guess what? We take the responsibility of finding the solution. And we’re going to find the solution to every challenge,” the Head of State said.
Once operational, this power ship will inject approximately 36 megawatts of electricity into the national grid, offering much-needed relief at a time when the country is facing heightened power outages following what the GPL had described as engine failures at different locations. At least two engines are currently down.
With its challenges, GPL is now generating some 165 megawatts of power. However, the current peak demand for electricity is at 180 megawatts.
The power ship that is being rented was last operated in Cuba as a part of a contingent of similar generation assets that UCI is operating
While the rental deal was signed with UCI, which is a subsidiary of UCC Holdings – a company incorporated in the State of Qatar, the power ship is owned by Turkey-based Karpowership International.
UCC Holdings has a strategic alliance with Karpowership for operations in the Latin American region. Currently, the Turkish company operates power ships in the Dominican Republic and Brazil. (G-8)