Fmr. CDB economist backs new gas plant to solve Guyana’s power problems


By Vishani Ragobeer

The generation of electricity in Guyana- rated as unreliable, unstable and expensive- has resulted in some of the worst energy woes in the Caribbean but Dr. Justin Ram, the former Director of Economics at the Caribbean Development Bank (CDB), believes that the forthcoming new power plant, fired by natural gas, can solve these woes.

The government proposes to run a 135-mile pipeline from offshore Guyana to Wales, West Bank Demerara, to bring in gas being produced by ExxonMobil’s operations in the prolific Stabroek Block. This gas will be used, it is proposed, to fire a power plant producing 300 megawatts of electricity.

Dr. Ram presented research findings at a virtual forum organised by the Guyana Business Journal (GBJ) and the Caribbean Policy Consortium (CPC) on Tuesday.

The well-known regional economist related that as of 2020, over 90 per cent of Guyana’s total energy was generated from fossil fuels, such as diesel.

“Using heavy fuel oil to generate energy and electricity… Guyana faces unstable, unreliable and high electricity rates and this, of course, leads to many other costs in the economy being much higher than they should,” Dr. Ram posited.

GPL employees at the Garden of Eden, East Bank Demerara, Power Station (Photo: DPI/May 24, 2021)

Based on research, Dr. Ram related that Guyana experiences the most power outages in the region.

Further, he noted that power outages in Guyana are rated as the longest in duration, averaging about 3.4 hours. Jamaica experiences the shortest duration of power outages, averaging at about 1.8 hours.

“When you look at this and what the economic impact of this is for the country, it is estimated that about 1.6 per cent of sales in the private sector are lost as a result of these power outages compared to about only 0.3 per cent of losses in Suriname, because of the lower amount of power outages there.

“Because of this high cost and unreliability of electricity, it imposes a significant cost on the economy,” Dr. Ram said.

The reliance on fossil fuels, for Guyana, is also costly. US$150 million (or GY $31 billion) was spent last year to import fuel needed to generate electricity, Chief Executive Officer of the Guyana Energy Agency (GEA) Dr. Mahender Sharma said recently.

The Demerara-Berbice Interconnected System (DBIS), which is Guyana’s main power supply system and is powered by the Guyana Power and Light (GPL), used nearly 80 per cent of the fuel purchased.

Countries around the world recognise the need to reduce their reliance on fossil fuels for energy generation because it creates more greenhouse gases that harm the environment, resulting in worsened effects of climate change such as increased flooding.

Dr. Ram, however, noted that the forthcoming gas-to-energy project can help Guyana surmount these woes. In fact, he contended that this project can help Guyanese access affordable, accessible and more reliable electricity.

The natural gas produced at the Liza developments in the Stabroek Block offshore Guyana will serve as the catalyst and transition fuel for Guyana.

Dr. Ram also said that this project is likely to foster economic diversification and job creation, while allowing the country to save foreign exchange that would have been spent to import heavy fuel and diesel.

“From the research that we have done and a lot of the literature review we’ve looked at, natural gas can support and complement the process of changing the energy mix towards renewable energy and sustainable sources,” he said too.

Concerns have been raised that using natural gas will worsen environmental conditions and climate change. Natural gas is a fossil fuel but it is considered less harmful to the environment than other fossil fuels like oil and diesel.

And natural gas has been touted as a “transition” mechanism that will help countries wean themselves off of their dependence on fossil fuels and move towards more renewable energy sources like wind, water and solar energy.

While he said those concerns have merit, Dr. Ram emphasised, “I think gas can provide a really useful bridge to that energy future Guyana is trying to achieve.”

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