After conducting its own analysis, the Georgetown Chamber of Commerce and Industry (GCCI) has thrown its full support behind the gas-to-energy project being developed at Wales on the West Bank of Demerara.
At a press engagement on Wednesday, several executives and Past Presidents of the Chamber highlighted the numerous benefits of the project and why the private sector is behind it.
The Chamber’s Senior Vice President and Chairman of the Petroleum Committee, Richard Rambarran emphasised that the project is not just one that will lower the cost of electricity by about 50%.
Additional benefits, he said, include a cheaper, reliable source of energy which can stimulate the growth of the local manufacturing sector, attract more investments and give Guyana much-needed energy security.
The chamber’s analysis used publicly available information on the project and assessments of the impact of Guyana’s current dependence on heavy fossil fuels. Rambarran, an economist, said the analysis is sound and emphasised that the project is feasible.
“…We believe the cost of the project is in alignment with the benefits that will redound,” he said.
INVESTORS SCARED AWAY?
Much of Guyana’s electricity needs are satisfied through supply from the Demerara Berbice Interconnected System (DBIS), run by the Guyana Power and Light (GPL) Inc.
Consumers pay about 30 US cents per kilowatt hour for electricity, a figure higher than the Caribbean’s average cost. According to the World Bank, the average rate in the Caribbean is around 25 US cents per kilowatt hour.
Rambarran noted that electricity costs account for about 30 to 40% of a business’s operating costs. Because of the high cost of energy, investors have been scared away.
“For every 10 investors that we see, between seven or eight of them delay their investment decisions because of electricity generation.
“…When the realities of operational costs hit home to investors, and find out where we are in this hemisphere in relation to energy generation, they are driven away,” he noted.
The chamber executives believe that situation will be reversed once the new project is operational. It’s not just foreign investors seeking to develop projects here who have lost.
GCCI’s Secretary Kathy Smith said women, primarily those who may venture into small and medium-sized enterprises, have also walked away from manufacturing projects because the current cost of electricity is too high.
“A lot of the women have been saying that we do not need handouts… a low energy cost would assist us in doing that (getting into manufacturing),” Smith said.
FEASIBLE PROJECT
The Chamber recently wrote to the United States (US) Export Import (EXIM) bank endorsing the gas-to-energy project, as the Guyanese government waits on the bank to approve a US$646 million loan. That loan is needed to fund the project and the government says it is optimistic that the EXIM Bank will approve the funds.
The Executives firmly believed that the project is feasible and that’s why they wrote the bank.
Concerns have, however, been raised that the project’s costs have been growing and therefore, it may not lower the cost of energy by 50% as is expected.
Those business leaders gathered at the press engagement contended that there are several factors to consider when determining the project’s feasibility and benefits.
One is that even if the cost of producing electricity through this project goes up marginally (it had been pegged at five cents per kilowatt hour), the Public Utilities Commission (PUC) still determines the actual rate consumers pay. So the government can guarantee that the cost is halved as it derives other benefits from the project.
A major benefit of the project, according to Rambarran, is that it could help insulate Guyana from external shocks like volatile energy costs.
“… Because when a war happens and you’re driving down the road, you can pull into Shell, GuyOil or Rubis or something and you can purchase gas at a price that is suitable. You no longer have to be at the whims and fancies of what the international market price for oil, etc is,” Rambarran said.
