01-04-03 The privatisation deal for the Guyana Power and Light Corp. has collapsed, less than four years after it was signed.
Prime Minister Sam Hinds, in making the announcement on 31 March, told the two sides "expect to complete the transfer of AC Power's (American and Caribbean Power) shares and the termination of the management contract no later than 30 April 2003".

On the transfer date, the amount of $ 3.4 mm held in escrow and in dispute, will be released to AC Power, Hinds said. He added that while the Guyana government was expected to fully own the power company again, it has already decided "to secure private investment in GPL".
"As we speak, government is taking all the necessary steps to appoint a new Board of Directors, a CEO and the other new management and to secure the necessary financial and administrative arrangement to maintain GPL's operations," Hinds said. He also said government has agreed to "purchase all of AC Power's equity interest in GPL for one United States dollar and AC Power will release all of its rights of ownership and management in GPL".

The Guyana Electricity Corporation (GEC) was privatised in 1999, amidst much public criticism by local stakeholders, including trade unions, consumer advocate bodies and private sector entities. The power deal was thrown into uncertainty since 2001 after strong government criticism of the performance of the expatriate team comprising Commonwealth Development Corporation/Electricity Sector Board International (CDC/ESBI) of Ireland.
Commercial line losses jumped to 44 % last year, defying plans to slash it by 20 % as stipulated in the management contract. This inefficiency cost the company an additional $ 4.7 bn Guyana ($ 25 mm) needed to help meet power demands.

Last year, the watchdog Public Utilities Commission (PUC) also ordered GPL to repay some Guyana $ 1.3 bn ($ 7 mm) it overcharged consumers. Repeated hikes in tariffs have forced some big city businesses to pursue self-generation from late last year.
Sources also said that the Licence and Management Contract and other agreements brokered with the company, provided "no incentive to perform" because they are guaranteed 23 % rate of return of their investment. Hinds appealed for public support. He said government has commenced talks with the umbrella Trades Union Congress, the Consumers Association and the Private Sector Commission, asking them to "share in this challenge".