DRAFT April 3, 1996
The dramatic increases in the price of oil in the 1970s catapulted energy to the center of worldwide attention. Petroleum, by that time, had replaced coal as the major source of energy fueling western economic growth, and this sudden and large increase in cost had profound effects for oil-importing and oil-exporting countries alike.
Energy is extremely vital to the production process and its use straddles all economic and social sectors. The steep rise in energy costs increased its importance as a factor in production functions and often it assumed the status of a major variable. This forced most Governments to accord energy a central place in policy formulation.
Energy planning and policy formulation must take into consideration projected rates of growth and levels of activity of the various economic sectors. It is critical, therefore, that those responsible for national energy management be provided with information on likely energy demands, so that supplies can satisfy future requirements. However, even more than making projections, it is vital that appropriate policies and institutional structures be put in place that will assure an adequate amount of supply and a reliable supply. In this respect, our electricity sector has been deficient for many years, and this Strategy contains new policy orientations designed to correct that deficiency.
The principal primary sources of energy in Guyana are petroleum products, which are all imported, bagasse and fuelwood. In 1992, they accounted for 48.7%, 25.9%, and 25.4%, respectively, of the energy produced. Portions of all are transformed to electricity for use in all sectors.
Table 39-1 below shows total energy supply and sectoral use in 1992. These figures show that electricity generation, industry and mining and the residential sector account for 85% of utilisation of the primary energy supplied.
Table 39-1
Energy Supply and Sectoral Use
1992
Unit = 103 BOE
| Sector | Bagasse | Fuelwood | Petroleum Products | Total |
% of total
supply |
| Electricity generation | 400.0 | 40.0 | 1,069.0 | 1,509.0 | 24.5 |
| Charcoal production | N.A. | 13.0 | N.A. | 13.0 | 0.2 |
| Transportation | N.A. | N.A. | 593.0 | 593.0 | 9.6 |
| Industry and mining | 1,196.0 | 65.0 | 880.0 | 2,141.0 | 34.8 |
| Residential | N.A. | 1,444.0 | 140.0 | 1,584.0 | 27.7 |
| Commercial and public | N.A. | N.A. | 18.0 | 18.0 | 0.4 |
| Agriculture and fishing | N.A. | N.A. | 296.0 | 296.0 | 4.8 |
| Total | 1,596.0 | 1,562.0 | 2,995.0 | 6,154.0 | 100.0 |
Source: GNEA records
Note: Figures exclude OMAI and illegal importation of petroleum products.
The figures in Table 39-2 below show the value of petroleum imports for the years 1990 and 1994 in thousands of U.S. dollars and as percentage of export earnings. These figures reveal a decreasing trend, indicative of an improvement in export performance. Nevertheless, petroleum imports still take up significant amounts of foreign currency resources.
1. Petroleum
The only fossil fuel occurring in Guyana is petroleum. Petroleum exploration took place intensively between the late 1950s and the mid 1970s, and some additional exploration was carried out in the early 1990s. However, petroleum was brought to the surface only in the Takutu Basin, and there is no commercial exploitation at this time.
Table 39-2
Fuel Imports
| Year | US$ mill. | % of export earnings |
|
1988 |
74 |
32 |
|
1989 |
62 |
28 |
| 1990 |
62 |
25 |
| 1991 |
62 |
24 |
| 1992 |
96 |
26 |
| 1993 |
78 |
19 |
| 1994 |
84 |
19 |
Source: Bank of Guyana. For these calculations, export levels exclude re-exports.
Petroleum exploration is being promoted in three areas of Guyana: the offshore Guyana Basin, the onshore coastal section of the Guyana Basin, and the Takatu Basin, which is inland in the Rupununi District. Seismic coverage on all the areas has improved significantly since 1985, and the Government is prepared to offer attractive production sharing agreements to investors for fields with upside potential.
At the time of this writing, the Petroleum Unit of the Guyana Geology and Mines Commission (GGMC) was negotiating a section of the Offshore Guyana Basin with an oil exploration company that operates in the USA. This concession is essentially the same as that which Mobil Exploration Guyana, Inc., relinquished in 1994 (the Pomeroon block to the north of the Basin).
Also, the GGMC is expected to reach an agreement with Petrel Petroleum Corporation of the USA in the near future. This agreement will grant exclusive rights to that company for a limited term, to promote technically the prospecting of a section of the Offshore Guyana Basin adjacent and to the east of the Pomeroon block. These new agreements have the potential for some concrete results and commitments, which have not been forthcoming to date, despite the efforts of several investors and operators.
2. Hydropower
The economic potential for hydropower is estimated to be in the region of 7000 MW. This resource is not being exploited currently but, clearly, a large part of the solution to the country's long-term power needs lies in hydro-energy.
The Guyana Natural Resources Agency (GNRA) has prepared a position paper on the development of medium/large scale hydroelectric facilities in Guyana. Based on existing data and previous studies, six sites have been identified with the purpose of selecting one for development in the first instance. These six sites are:
Tiboku Mazaruni River Basin
Amaila Potaro River Basin
Tumatumari Potaro River Basin
Kamaria Cuyuni River Basin
Tiger Hill Demerara River Basin
Arisaru Essequibo River Basin
All these sites have been studied up to at least the pre-feasibility level, but environmental impact assessments have to be done. Based on existing information, the Hydropower Unit of the GNRA recommended that Guyana's large scale hydroelectric development programme should commence with the Amaila Falls site, with a potential capacity of 195 MW. The principal attractions of this site are its low unit costs per kw of capacity, its small reservoir, and its high reliability of supply. The second site to be evaluated for development is Tumatumari, whose generating capacity could range from 50 MW to 120 MW, depending on how the project is scaled. Although this project would be easily accessible, its economics would not be favourable if it were constructed alone. However, if built after the Amaila project, which is located further upstream and could help regulate water flows, its unit costs would be lower. A third priority could be the development of the Tiboku site, but that project would inundate a very large area and so its environmental consequences might prove to be prohibitive.
3. Bagasse
Bagasse is currently used for the co-generation of steam and electricity in the sugar industry. An analysis of the potential of this energy source reveals that more electricity could be generated than is currently done using bagasse as a fuel. However, potential barriers to expanding the supply of electricity based on bagasse include lack of year-round cane supplies and the cost of converting installed machinery in sugar mills. Further analysis will be made of bagasse as a potential energy source, but it must be recognised that it is unlikely to play an important role in meeting electricity demands.
4. Fuelwood
Forests cover approximately 75% or 16 million hectares of the country's land area. However, active encouragement of increased fuelwood consumption would have to be tempered by environmental concerns. In situ woodwaste from the timber industry remains a viable potential source of energy. At the current time, two lumber enterprises generate a total of 3 MW of power from woodwaste for their industrial uses. To better tap the fuelwood potential over the longer run, it is important to begin reforestation efforts promptly in the deforested zones adjacent to coastal areas.
5. Other Sources
Rice husk is also a potential source of energy and is currently used by two rice millers for steam and electricity generation (approximately 1 MW). Currently, solar and wind energy play a very small role in Guyana's energy spectrum, but their potential contribution cannot be disregarded in the long term.
Biogas digesters provide methane gas for cooking and refrigeration. In the residential sector, the impact is more social and environmental than economic. The cost of construction of these digesters must be reduced considerably if they are to have a major economic impact in the residential sector. For large commercial and agricultural enterprises, this technology can be cost-effective.
As mentioned before, with the steep increase in the price of oil in the 1970s, most Governments felt it necessary to accord energy a central place in policy formulation. Guyana was no exception, and by 1981, the Government had set up the Guyana National Energy Authority (GNEA), established by Act No. 2 of 1981 (known as the Energy Act).
Among the functions of the Authority was to "study and keep under review matters relating to the exploration for, production, recovery, processing, transmission, transportation, distribution, sale, purchase, exchange, and disposal of energy and sources of energy, within and outside of Guyana, report thereon to the Minister and recommend to the Minister such measures as it considers necessary or in the public interest for the control, supervision, use, marketing, and development of energy and sources of energy."
The 1980s was a decade when the economy of Guyana faced severe financial constraints. Petroleum products took up an increasing proportion of foreign currency earnings, and along with debt servicing used up virtually all of this resource. New private investment of any significant scale was not forthcoming. The Government, as is clear, was strapped for funds, so even if it adopted a policy to increase reliance on indigenous sources of energy, the inability to attract the required capital investment defined the situation. In trying to overcome this situation, the Government found itself reaching special agreements to maintain and ensure petroleum supplies, first with Trinidad and Tobago via the T&T Oil Facility, and then with Venezuela in the form of a San José type agreement. Another consequence of the financial straits was that GEC's maintenance requirements were not met, a situation exacerbated by management deficiencies, and so its present equipment is badly deteriorated.
Nevertheless, during this period, the Government undertook and encouraged some initiatives regarding small scale alternative energy applications and energy conservation. For example, with the assistance of the Chinese and the United Nations University, a successful biogas project was implemented. Some enterprises in the timber and rice industries began to utilise their in situ waste to generate electricity and process steam. Demonstration projects using solar technology were undertaken. Energy audits were conducted at some major consuming entities, both public and private. By public exhortation and rationing programmes, like restricting the sale of gasoline on weekends, the Government attempted to build up an ethos of conservation.
The period of the early 1990s has seen significant changes in the economic health of the country, characterised by new policy orientations, output growth and increased financial reserves. In this new situation, exploitation of our natural resource endowment for satisfying our energy needs is now being reexamined, and the institutional character of the electricity sector is being redefined.
Policies of the sector to date have been those which are incorporated in the "Energy Policy of Guyana," completed in July 1994 and ratified by the Cabinet. The core idea in this document is the replacement of imported petroleum, as far as possible, by indigenous renewable sources of energy. In fact, with the assumptions made at that time, based on available information, it was projected that by the year 2004, Guyana could see a reduction in consumption of petroleum products in the order of 2 percent as compared with 1992. It was envisaged that increased and more efficient utilisation of domestic energy resources, primarily hydro-energy and bagasse for electricity generation, would make the largest contribution in this regard.
The other significant element of recent policy has been the encouragement of private sector participation. President Cheddi Jagan stated in an address to the nation in December 1993: "The Government is set on a course to build a healthy market-oriented economy, with the private sector playing a vital role." The policy envisaged that Independent Power Producers (IPPs), which are investor-owned enterprises involved in power generation, will be encouraged.
These policies are still valid and are incorporated into the Strategy. However, as stated in section IV of this Chapter, additional policies are needed to revitalise the electricity sector.
The purpose of energy policy and planning is to stimulate economic development by securing reliable sources of energy as economically as possible. Since energy is an input into other activities, its demand is a derived demand. Consequently, "the desirable level of energy production and supply therefore cannot be specified independently of expected levels of activity in other areas of the economy(1)
." Energy must be supplied not only in the requisite volumes, but with reliability. The latter implies a steady supply, 24 hours a day and 365 days per year and, in the case of electricity, a supply that is not plagued by voltage fluctuations. The basic concerns, therefore, become the following: Given the desired levels of activity, how best can the energy required be provided, how can its cost be kept within reasonable bounds, and how will this cost be financed?
Petroleum products, that account for almost 50 percent of energy supply, are all imported, and a sufficiency of foreign currency to satisfy this need is another important economic issue. It is logical to seek to reduce this dependence, primarily by energy conservation and increased exploitation and utilisation of indigenous energy resources. However, considerations of cost-effectiveness always must be kept at the forefront of planning for each potential source of energy.
The installed capacity of GEC's inter-connected system is 86 MW (including the Wartsila plant at 10 MW), but the generating capacity is only 29.7 MW, owing in part to the heavy requirements for maintenance of aged equipment. In contrast, the demand ("basic load") in 1995 was estimated at 65 MW(2)
, leaving an unsatisfied demand of about 35 MW. In other words, the "average" customer received power a little less than half the time.
A complicating factor is the need to retire some of the antiquated facilities. The retirement schedule calls for phasing out of service by the year 2000 capacity in the amount of 41.4 MW, which would leave an installed capacity of 44.6 MW and a generating capacity of 17.7 MW. Current demands are more than three an one-half times as high.
Overall, energy demand can be expected to grow considerably more rapidly than real GDP, in part because manufacturing and private services will expand faster than GDP, and in part because some major new industries are especially intensive in the use of electricity. Accordingly, the estimates made in 1994(3)
are revised upward, and total effective demand for electricity is expected to grow by 8 percent per year from 1996 through 2000, and by 7 percent per year from 2001 to 2005. This projection indicates that generating capacity in 2000 will have to be 95.5 MW, and installed capacity 137 MW, if the current deficit in supply is to be made up as well as satisfying the growth in demand. This estimate is significantly higher than other estimates used recently and it will require a revision of plans for capacity expansion.
It needs to be stressed that the lack of a reliable supply of electric power has been holding back the development of our economy. Power costs are unduly high because many industries are forced to generate their own electricity and equipment is damaged by erratic voltage, and potential investors are discouraged by the situation. In addition, small enterprises, potentially the most important source of new employment, are discouraged from starting up because of the high cost of generating their own power. Furthermore, the deficiencies in electricity supply have a direct impact on the residential sector. An enduring solution of these problems has an important institutional dimension, as discussed below.
Four types of constraints have been identified in the energy sector: financial, technological, institutional, and environmental. Each is examined in turn.
1. Financial
Energy supply systems --electricity generation, transmission and distribution, oil and gas wells and pipelines, coal mines, energy forests, petroleum distribution facilities-- usually require large capital investments. Governments in countries like Guyana, where foreign exchange and other resources are often available in limited quantities, face tremendous difficulties with energy development and development in general, and making acceptable arrangements for financing becomes a major economic and political task.
In Guyana, the Government faces an additional financial burden, in that the public power utility has found it difficult, for various reasons, to achieve financial sustainability. Rates have historically been below unit costs of production and huge transfers from Central Government have propped up the organisation. Nonpayment for as important an input as fuel, imported under special arrangements with Venezuela, amounts to another subsidy. All this, in turn, inhibits the utility's ability to self-finance the required new investments.
2. Technological
Like many smaller developing countries, Guyana has very little indigenous technological capability in energy supply systems. Given the country's colonial history, where the economy was characterised by foreign domination, reliance mostly on primary production and a narrow production base, those stages of the production process that created employment, added value, and development of technological capability were exported to the metropole.
To this day, the country remains technologically dependent on the outside. Our manufacturing sector has demonstrated some capability in production and development of energy supply equipment. One firm for example, has manufactured a mini-hydropower turbine. Another company is producing solar water heaters. Programmes to develop and disseminate biogas and solar drying technologies have had some degree of success. However, as to equipment required for large scale energy supply systems, the country has neither the productive capacity nor the technological know-how.
One additional issue facing the sector, from a technological point of view, is the cost competitiveness of some technologies for using some of our domestic energy resources. Many ideas for utilising renewable energy sources like solar and wind power are appealing, but the costs are high. However, it seems to be the view of many experts that wind energy applications can prove cost-effective, and researchers are confident that in the future the cost of solar power generation could be brought down considerably.
3. Institutional
For national energy planning and management to be done properly and executed effectively, the necessary institutional capability must be in existence. This sounds obvious, but it is all too often taken for granted, and therefore must be outlined explicitly.
An effective organisational apparatus should be put in place for formulating, executing coordinating, monitoring, and reviewing energy plans, projects, policies, and programmes with respect to energy. There is need to rationalise the institutional structure for energy management, and in recognition of this, there is a draft legislation to set up a central energy agency that will focus primarily on energy planning and policy making. The execution of policy and day-to-day operations will remain the responsibility of line agencies like electric utilities or petroleum companies, and in this area also major improvements are needed. Above all, management responsibility must be placed in the hands of the private sector.
Concomitantly, there is need for a cadre of people with the necessary skills and knowledge to undertake the job at hand. An adequate corps of hydropower engineers, renewable energy experts, energy economists, petroleum engineers, geologists, etc., has to be put together. The Government should consider it a sound investment to embark on a programme to provide overseas training to a number of people in certain specialised areas who could then undertake the jobs of energy planning and management.
4. Environmental
The imperative of avoiding unnecessary environmental degradation as the development process takes place has become a major issue for governments and people worldwide. It is recognised that many of the more developed countries in the world have achieved that status by exploiting resources in a reckless and unsustainable manner, and now great efforts are underway to correct the environmental damage caused by that approach. Current generations have a responsibility to utilise resources in ways that take into consideration the needs of future generations. It is essential, therefore, to take into account the potential environmental effects of energy projects. Environmental legislation soon to be put in place will make this legally necessary.
In addition, multilateral financial institutions now have environmental conditionalities attached to loans. Environmental lobbyist groups have become much more effective in their advocacy.
The energy sector, in particular the use of fossil fuels, has been a major contributor to global environmental problems. Hydropower development could have major localised environmental effects. Meanwhile, technologies for using "clean" energy like wind and solar power are being improved. The environmental imperative, therefore, presents a greater challenge to energy planners than most other sectors.
The electricity sector plays a strategic role in the development of the economy. If Guyana is to realise its very considerable development potential, a reliable system of electricity generation and transmission is essential. The costs and inconveniences of self-supply of electricity are high enough that they are effectively prohibitive for smaller enterprises and, of course, they are out of the question for most householders. In any case, a modern economy cannot be built on the basis of individual electricity generators. A properly functioning system with adequate capacity is needed.
Accordingly, the principal policy objectives for the energy sector are the following:
1. The main policy objective of the Strategy with respect to the energy sector is to assure that an adequate and dependable supply of electricity is available for the country's future economic development. This includes improving both the quantity and the quality of the electricity supply. The latter refers to reducing the frequency and magnitude of voltage fluctuations, as well a the frequency of outages. It should be noted that achieving this objective will require substantial capital outlays and also improvements in the management of GEC.
2. A subsidiary but important objective is eliminating the need for Government fiscal transfers.
3. To reduce the dependency on imported petroleum products, where feasible.
4. To provide increased utilisation of new and renewable domestic energy resources.
5. To ensure that energy is used in an environmentally sound and sustainable manner.
6. To encourage, through public awareness programmes, energy conservation practices.
For the implementation of programmes that lead to fulfillment of these sectoral objectives, it is essential to spell out the essential supporting objectives of an institutional nature. This step is all the more urgent because for many years now the existing institutional structure of GEC has shown itself unable to satisfy the objectives given above, especially the first two. Basically, the reasons are two-fold:
a) Lack of sufficient management autonomy to be able to make fundamental decisions on purely technical and financial grounds regarding capital expenditures, current expenditures, staffing and salaries, tariff schedules and other critical topics.
b) Lack of sufficient financial resources to properly rehabilitate, maintain and improve the system.
Therefore, the principal institutional objectives for the GEC in the context of the National Development Strategy are to overcome these constraints, that is, to provide it with sufficient management autonomy and to create an institutional framework that is conducive to securing the requisite levels of funding, without recourse to the Central Government's budget. An additional objective is to ensure that the institutional character of GEC incorporates adequate participation on the part of the Guyanese public, given that the electricity sector affects all sectors of the economy and directly contributes to household living standards.
It has already been noted that energy development requires substantial capital investment, and acquiring such financing is a major task. The National Energy Policy suggests several financing options that include short-term and long-term borrowing by the Government, 100 percent direct foreign investment, and joint venture schemes between foreign investors and Guyanese companies.
As countries seek to improve their economic condition, there is great global competition for investment and assistance. With the political changes in Eastern Europe and continuing cutbacks in American assistance, international financing can become relatively more difficult to come by. Government must put in place appropriate fiscal and monetary incentives to attract investment and to be competitive, while ensuring that the country gets its fair share of benefits to be derived therefrom. Meanwhile, it should continue discussions on energy development with multilateral financial agencies as an alternative means of financing.
Discussion of investment must inevitably address the issue of pricing policy. Munasinghe (1985) notes that pricing and investment decisions should be closely related. Energy investments tend to have long lead times and lifetimes, and pricing policy, therefore, must have a long-term horizon.
Munasinghe identifies a number of objectives of pricing policy. These include:
Promoting economically efficient allocation of resources both within the energy sector and between it and the rest of the economy. This implies that the price for the marginal unit of energy used should reflect the incremental resource cost of supply to the national economy. This is a direct contradiction to the average cost pricing practiced by many energy sector operators.
Ensuring that all citizens are supplied with certain minimum amounts of energy to cover their essential needs. This implies subsidised prices for low income consumers.
Ensuring a fair rate of return on assets and tariff levels that will permit self-financing of an acceptable portion of the investment required to develop future energy resources.
Promoting energy conservation, which often is a cheaper way to close the gap between energy supply and demand than increasing electricity generating capacity.
Guaranteeing stability of supplies to prevent shocks to consumers from large price fluctuations and enforcing simplicity in pricing structures to avoid arbitrariness and confusion for the public.
The need to enhance the institutional capacity for energy planning has already been emphasised, and new policies for that purpose occupy centre stage in this Strategy. At this time there still are not enough people in the country with the specialised skills that are necessary to carry out energy planning. Government must decide whether to embark on a programme to train an adequate complement of technicians, or rely on hired consultants and short-term technical assistance, or put in place private management that will secure the required expertise.
Another institutional issue involves the level of regulation that should be exercised, particularly over the electric utility. In the past there has been a temptation to give the utility special treatment because of its strategic importance and the difficulties it faces. Some view this as counterproductive and feel that the GEC should be run like a business, subject to overriding Government policy for its broad outlines of development.
Technological options have been divided into short-term (next two years), medium-term (up to five years), and long-term (five years and beyond). The objective here is to try to identify, on the supply side, the best mix of the sources of energy and fuels that are available and considered to be cost-effective. On the demand side, it includes introducing more efficient energy conservation devices, such as better stoves for wood fuel, energy-efficient light bulbs, and fuel-efficient vehicles. The principal technological options are outlined below.
1. Intermediate and Short Term
Turnkey plant for electricity generation, most likely based on fossil fuels.
Upgrading of the transmission and distribution system.
2. Medium Term
Additional fossil fuel-based generation, possibly complemented by some use of bagasse and wood waste.
Exploration of the use of mini-hydro, wind systems, and solar applications, in the more remote areas of the country.
Further upgrading of the transmission and distribution system.
3. Long Term
Hydro energy and possibly other renewable sources, depending on their demonstrated cost-competitiveness, e.g. wind, solar.
All these options cannot be evaluated at a single point in time. The cost-competitiveness of different technologies is evolving continuously over time. The energy authority, working in concert with GEC, GUYSUCO, and other institutions, will undertake new evaluations and project new future scenarios at frequent intervals.
1. Active encouragement of private sector participation in the energy sector, in particular in electricity generation based on both imported and indigenous resources (bagasse and hydropower being priorities for the latter) and in transmission as well.
2. Maintenance of an electricity tariff structure that is equivalent to marginal cost pricing, while at the same time continuing to offer preferential rates to households that consume less than a specified threshold amount of electricity on a monthly basis. Movement toward a rate structure that is more consistent with these guidelines was initiated in late 1995 and will be continued.
3. Elimination of transfers to GEC from the Central Government.
1. In light of the sectoral objectives, and the history of problems in the electricity sector, one of the key policies in this National Development Strategy is to put GEC on a sounder institutional footing.(4)
This will involve reaching agreement with a strategic investor on a capital investment programme for the sector, in exchange for equity participation, and also providing the Guyanese public at large with equity in the institution. In this way, the sector's capital needs can be met, the requisite management autonomy can be achieved, and the wider public's interest in the sector can be given concrete embodiment, in line with the theme of a participatory economy that characterises the National Development Strategy.
The basic steps for implementing this policy, which illustrate its content, are as follows:
a) Rehabilitation of the present generation capacity will continue and new fossil fuel capacity will be brought on line, to meet the sector's immediate needs.
b) Projections of the nation's likely electricity requirements over the next ten years will be reviewed and refined, including a breakdown of those requirements geographically and by major economic sector.
c) GEC will be converted into a public corporation and its management restructured accordingly.
d) GEC's present installations will be appraised realistically, on the basis of expected returns to the existing capital.
e) Competitive bids will be solicited for an investment-cum-management programme that will satisfy the projected power requirements. The winning bidder will receive a majority share of the equity in GEC. The shares representing this equity will be known as Class A shares.
f) Simultaneous with the solicitation of bids, another proportion of the equity shares will be offered to the general public, at a discount of the face value, with no single individual allowed to purchase more than a specified amount of equity. These shares will be known as Class B shares. Any shares not taken up in the first offering will be auctioned in small lots, with no single individual permitted to purchase more than one lot. This step is one of the many measures in this Strategy that are basic to creating a more participatory economy.
g) Class B shares will be endorsed with the names of the individuals who purchase them, and their transfer will not be permitted for a period of five years after their sale, at which time they will become freely transferable.
h) Government will retain the remaining equity. Government shares will be known as Class C shares.
i) All classes of shares will have equal provisions in terms of access to dividends and voting rights.
j) After the transfer of shares is completed, and in any case no later than 120 days after the issuance of the Class A and B shares, a new Board of Directors will be elected by the assembly of shareholders and new corporate operating rules will be adopted. Each share will entitle the holder to one vote for the Directors and on each clause of the operating rules.
k) Special legislation will be passed to facilitate this restructuring of GEC. This legislation will contain provisions for converting GEC into a public corporation before the transfer of its equity takes place.
2. The above-mentioned legislation also will permit the establishment of new private electricity companies in outlying regions and will establish guidelines for sharing existing transmission lines, in cases in which that is necessary.
3. The option of co-generation, and sale to an electricity company of the excess electricity thereby produced, will be confirmed and the rules for establishing the corresponding sales price will be developed.
4. Government will establish the Guyana Energy Agency and embark on a programme to train a cadre of specialists to carry out national energy planning.
5. Through new legislation, the Public Utilities Commission (PUC) will be given the responsibility for regulating electric utilities, whether owned by private investors or the State, including the review and sanction of tariff changes.
1. Government is acquiring additional electricity generating capacity as an immediate priority. It also will embark, without delay, on improvement of the electricity transmission and distribution system, even prior to the restructuring of GEC.
2. The new Guyana Energy Agency will develop a national energy conservation programme and oversee its implementation.
3. Guyana's energy planners will continuously monitor world developments in respect to alternative energy sources, especially solar power, which has shown unit cost reductions of a hundred-fold over the past twenty years. Solar power is especially promising as an energy source for widely dispersed communities in the interior.
4. A programme of reforestation of the Sandy Rolling Hills area in fuelwood species will be designed and implemented as a priority measure.
Legislation will be prepared to facilitate the restructuring of GEC set out above.
A draft bill is currently being considered for the establishment of a new Guyana Energy Agency. The objective of this legislation is to rationalise the institutional structure for energy planning and policy making. Enacting this legislation is considered a critical aspect of the future strategy for national energy management and planning. The bill will be reviewed and modified as needed to make it consistent with the programme outlined for GEC.
Act No. 10 of 1991, called the Public Utilities Commission (Amendment) Act 1991, removed the authority of PUC to determine and fix rates to be charged by the GEC. It is advisable to restore this function to the PUC as soon as possible.
Some energy developments, in particular large-scale energy supply systems based on domestic resources, lack concrete sources of finances. In this situation, an investment programme that should normally include a set of activities, time frames envisaged, costs and sources of financing cannot be developed with the desired degree of precision. However, the following are some major priority activities/projects and their associated lead times and costs. In all cases except the GEC rehabilitation, which will be pursued via competitive bidding, feasibility studies will be carried out before proceeding further.
| ACTIVITY | LEAD TIME | PROJECTED COST (US$M) |
| Rehabilitation of GEC by a strategic investor |
24 months |
To be determined |
| 10 MW woodwaste plant at Crabwood Creek |
12 months |
10 |
| 195 MW hydro-power station |
48 months |
To be determined |
| Micro hydro-power plants at selected locations |
12 months |
To be determined |
1. 0Trevor M. A. Farrell, Planning for the Energy Sector.
2. 0Hydropower Unit, Guyana Natural Resources Agency, "Hydroelectric Power Development for Guyana: Medium-Large Scale," Georgetown, August, 1995.
3. 0 National Energy Policy Committee, Energy Policy of Guyana, Georgetown, July, 1994.
4. 0To put GEC's problems in historical perspective, it should be noted that its electricity generation in 1993 was less than in 1969, in spite of the widespread presence of private generators, indicating substantial pent-up demand for electricity from the system.