Electricity sector in Guyana
This low reliability has led most firms to install their own diesel generators, which in turn leads to higher than average electricity costs.
[1] Self-generation is widely spread in Guyana, where 100%, 82% and 37% of large, medium and small firms respectively own generators which supply them with 64%, 54% and 31% respectively of the total electricity consumed.
Similarly, while electrification is higher in coastal towns with a high industry concentration, there are vast areas of the country that appear underserved on this account.
[1] Reliability of electricity supply is low, and characterized by frequent and long outages (the highest incidence in Latin America and the Caribbean), load discharges and voltage variations.
Poor reliability has been linked to dependence on old and obsolete equipment for power generation, underinvestment in the distribution grid, and lack of incentives for efficient provision of service.
[1] GPL initiated a loss reduction plan in 2006, but by 2012 and on still faces continual challenges due to an "ingrained culture of electricity theft" and illegal connections.
[4] The legal, regulatory and institutional framework for the electricity sector includes:[1] Office of the Prime Minister has principal policy-making and regulatory responsibility in the sector, including for granting licences to the public utilities and independent power producers and approval of development and expansion plans and of operating standards and performance targets for Guyana Power & Light (GPL), the principal supplier.
Public Utilities Commission is the multi-sector independent regulatory agency with authority to set rates, develop regulations and resolve disputes.
GPL dominates the electricity sector in Guyana as a vertically integrated government-owned utility with a monopolistic position on transmission and distribution, and a major stake (55%) in generation.
The fragile financial position of GPL (due mainly to heavy system losses and high exposure to oil prices) constrains its investment capacity on essential maintenance and improvement of generation plants and transmission lines and grid.
Increased and more efficient use of domestic energy resources, primarily hydropower and bagasse for electricity generation, is envisaged to contribute significantly in this regard.
Feasibility studies have been carried out for specific projects, but up to now, this potential remains untapped, mainly due to the considerable capital investments required to set up new power facilities.
However, an important constraint to Guyana's bagasse-based generation potential is the lack of year-round supply of bagasse, which means that a substantial investment in storage and hauling would be required.
Other Caribbean countries such as Barbados and St. Lucia have promoted the use of such renewable energy sources through initiatives that include the removal of taxes and import tariffs on wind-farm equipment.
[1] Tariffs effective February 2008 are:[6] Reduction of Guyana's reliance on imported oil and the improvement of energy efficiency will require large investments that will impact on the fiscal stability of the country.
However, under the current ownership structure of the system, this level of investment would pose a significant burden on the Government of Guyana, and would create considerable debt sustainability concerns.
While private participation is desirable, it may also not lead to significant improvements when regulatory capacity is weak and enforcement of contracts is insecure, as is the case in Guyana.
