The announced salary increases in the 2019 Budget were a welcomed development. But why did it take a shellacking at the 2018 Local Government Elections for common sense to prevail? Overall, any salary increases will drive private consumption, especially when it is targeted at those at the bottom of the economic ladder. Such a measure will positively aid economic growth. So this is good short-term news for Guyana.
But on top of that news, there is even better short-term news for Guyana. Today we are reading that the cost of oil on the international market is experiencing a downward spiral, as surges in production in the US petroleum industry appear to be holding firm. At the time this column was written, the American markets were selling oil for below US$52 per barrel as shown in the graph below illustrates. The trend is no different on the European markets.
Expectations that oil prices will remain depressed for a prolonged period spell good news for consuming nations like Guyana, with cheaper gasoline at the pump and electricity production cost. Guyana remains a consuming nation today and it appears this will be the case even after we commence the production of crude oil since the oil investors have rebuffed the idea of an oil refinery.
Fact – lower oil prices mean less foreign currency will be consumed to purchase petroleum products. For example, if one is to annualise the drop in price being experienced over November 2018, it will compute to an annual savings of US$55 million. This price is expected to hold for at least for six months, which means the Minister will not have to hunt for some US$25 million to pay for petroleum products between now to May 2019, because of these lower new prices.
Of that US$25 million in savings over the next six months, GPL’s share alone is expected to be approximately US$7 million (GY$1.4 billion). Will any of that saving be passed on to the consumers? I guess not!
This is something that the Public Utilities Commission (PUC) ought to seriously consider. Even if the consumers do not benefit from the cost savings, then GPL should as a matter of priority, reinvested all of these funds into its transmission and distribution (T&D) system to ease “the blackouts blues” being imposed by this monopoly on the Guyanese public. The experts tell me that GPL does not have a power generation problem; it has a T&D problem.
GPL’s 2016 audited financial statements revealed that it made GY$6.2 billion in profits compared to GY$3.3 billion in 2015. I am told its profit for 2017 topped GY$8.1 billion. The net cash inflows at that company in 2016 were GY$8.5 billion compared to GY$3.4 billion in 2015. I was again told that GPL’s net increase in cash for 2017 topped GY$10 billion. And the balance sheet confirms these truths. The business had GY$15.8 billion in the bank at the end of 2016. I was told they have over GY$20 billion in their bank account at the end of 2017 and it has been growing since then. All the evidence points to the fact that this company is cash rich, but yet they have the audacity to provide a quality of service that is deteriorating as the coffers fill up.
In such an unfair situation, the consumers have no recourse and are forced to pay their way while being in this energy chokehold that GPL has around their necks. And the situation is getting worst. Knowing all this information, it is baffling to me as to why the regulators at the PUC continues to fail this nation by not holding this monopoly accountable for such poor services to the nation.
I see many are celebrating that the teachers are now getting an average salary of GY$81,000 per month after their struggles, but when an average of 19 per cent of their salaries are spent on GPL bills, there is nothing to celebrate. The Guyanese people are caught paying a company that chooses to grow its stock of cash and at the same time must not expect any compensatory improvement their services. This is an abusive relationship that must be changed but the consumers do not even have a Guyana Consumers Association or a Guyana Human Rights Association to advocate for them. There only hope is a dysfunctional PUC. I am therefore calling out the PUC and asking them to investigate how these reductions in the prices of petroleum products can be more efficiently passed on the consumers of GPL in light of the fact that their service has remained consistently dreadful.
Wake up PUC!