US expert says Guyanese paying too much for energy

Developing oil sector

…projects local demand for oil to rise

By Jarryl Bryan

Experts are projecting that with the advent of the oil and gas sector, Guyana may face a situation where there is a high demand for energy and as a consequence, oil prices will rise. At the same time, they have expressed concern over the higher than usual price being paid by consumers.
This observation was made by a representative of the Global Green Growth Institute (GGGI), Carol Litwin. Litwin was speaking at a workshop held at the

Pegasus Hotel where energy experts were able to provide an analysis based on Guyana’s energy sector.
Litwin also noted that the price commercial and business class consumers pay for power is an abnormal one, considering the unreliable supply of energy.
“I see a sector dependent on heavy fuel oil or diesel,” she related. “I see a sector that is not always able to provide quality of supply. You have been growing at about five per cent, but that’s going to change. With oil and gas, it is quite likely that your demand is going to double over the next five to eight years.”
“At the same time, as the quality of supply is not always there for customers, the prices are extremely high. They can be as a much as 30 to 33 US cents for commercial and industrial consumers. This is considered as one of the higher end

countries.”
She acknowledged the steps Government has taken so far. However, Litwin observed that more remains to be done, like incentivising businesses.
“I see that the Government has put in place some good policies. I see the import taxes are exempt. But there is more the Government can do, more incentives, given that the prices in Guyana are so high.”
The Global Green Growth Institute’s mandate is one of helping developing countries with their energy sectors. It has 28 members, operates in 26 countries and uses three-tiered development plans – Green Growth Planning and Implementation (GGP&I), Investment and Policy Solutions (IPSD) and Thought Leadership.
In Guyana, the Guyana Power and Light’s Demerara (GPL) interconnected system is fed with power by the Power Producers and Distributors Inc. PPDI replaced Wärtsilä, a company from Finland which for two decades maintained over a dozen engines for the utility company. The company has consistently reported being able to cut costs.

Renewables
During his address on Tuesday to the workshop, Public Infrastructure Minister David Patterson noted that Government is sticking to its plans to keep medium and mini hydro energy systems at the forefront of plans for renewables. “Currently, we are looking to develop two medium-scale hydro plants for the national grid… while also focusing on developing mini hydro plants in the hinterland region, so there is an effort in delivering energy to rural residents.”
“Additionally,” Patterson continued. “We’ll be commissioning various scales solar plants in the hinterland, commencing this year. Feasibility studies are ongoing for the wind farm and we will continue to examine opportunities for bagasse (sugar cane derivative) fuel generation.”
Since ExxonMobil’s initial oil find in the Stabroek Block in 2015 and its subsequent discoveries, there has been much discussion about the ultimate benefits for Guyanese. But once the contract between the Government and Exxon was released last year, there was much criticism over its terms.
Besides the sweeping tax waivers, the Private Sector Commission has pointed out that there is nothing within the contract which paves the way for the business sector and the general populace to pay less for electricity and fuel.
In the Finance Ministry’s 2017 mid-year report, it was detailed that GPL’s 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, reinforcing the need for clean and renewable energy if the Government hopes to cut costs.