… says PPDI, even as mid-year report cites heavy oil as major expense
By Jarryl Bryan
Since taking operational control of the Wartsila engines, special purpose company Power Production and Distributers Inc. (PPDI) may be producing less energy compared to last year. But it is engaged in cost cutting measures and a strategic plan to improve its performance.
The Tumatumari hydro site
According to officials from the company, who took media operatives on a tour of their Kingston and Vreed-en-Hoop plants on Thursday, the new board has been delivering on their promise to cut costs by changes in maintenance.
The Government had justified not renewing Wartsila’s contract by contrasting its proposed rate of US$20.1 per megawatt, versus PPDI’s US$16. It was on that basis that PPDI was created and provided with the contract. PPDI Chief Executive Officer Arron Fraser explained what the company has been doing since then.
“How multi nationals operate, there is always an element of transfer pricing,” Fraser said. “So off the bat, that’s a saving. The other cost saving is that we are using our field engineers, who are Guyanese, who, before now, were used around the region to generate revenue for Wartsila.”
“So unless the work gets really beyond our capabilities, and that would be more focusing on the electrical side of things, we can do all the work. So there is no reason to be bringing the Wartsila field superintendent to overlook the maintenance. And that is a significant saving.”
Fraser noted that with an average of 11 maintenance exercises per year, using their own local specialists would save around US$500,000 per year.
Renewable energy
In addition to what it is doing to cut costs in the short term, the company is also readying itself to generate electricity for Guyanese through renewable sources.
In the 2017 mid-year report, it was detailed that GPL had improved its revenue collection by earning $17B in the first half of 2017. The whopping sum represents an increase from $14.7B for the same period in 2016. According to the report, the increase in revenue was as a result of more timely payments.
The report also details that expenditure increased from $9.3 billion in the first half of 2016 to $12.6 billion in the same period this year.
Interestingly enough, this increase in expenditure was noted to be due to higher costs for Heavy Fuel Oil (HFO), reinforcing the need for clean and renewable energy if the government hopes to cut costs.
According to Chairman of the Board, Mark Bender, the company has been preparing its own strategic plan, which would encompass renewable energy. Bender said that these plans will set out how PPDI will adjust to the Government’s own Green state strategy.
“The company is preparing a strategic plan. You would note that the government has a stated goal to produce all electricity from the grid, by 2025, from renewable and clean sources of energy. In that regard, there are a number of options being considered.”
“The two most significant ones at this time are hydro power and natural gas once oil and gas production starts. Of course there are other renewable sources like solar and wind. Right now the company has one client, GPL. But in the strategic plan, we are going to address how we will position ourselves as an independent power producer.”
The Inter-American Development Bank (IDB) had been assisting Guyana in assessing five out of 69 possible sites, which are proposed to house these hydro power amenities. The five sites under scrutiny are Tiger Hill, Kamira, Tumatumari, Amaila and Kumu. It is expected that their assessment will be completed in May of this year.
The Environmental Protection Agency (EPA) had also signalled its intention to grant an interim one year authorisation to Tumatumari Hydro Inc (THI), which brings the special purpose private company one step closer towards its planned rehabilitation of the Region Eight (Potaro-Siparuni) Tumatumari power plant.
To promote additional financial aid for the hydro power and renewable plan, the government is partnering with the Brazilian government. It is understood that government intends to use the US$80M from the Norway fund. This money was allocated to renewable energy development. Interested investors are also welcomed in this department.
Minister of Finance, Winston Jordan, has stated publicly during an engagement with the Guyana Manufacturing Services Association (GMSA) that the money is not sufficient for its plans. In fact, Jordan had spoken of difficulties being faced to access the funding.
