Budget Debate 2014
3908 08 Apr, 2014
Mr. Hinds: Allow me to join in commending our colleague the Hon. Minister of Finance Dr. Ashni Singh and his team for Budget 2014.
In his budget speech, in a businesslike manner, the Hon. Minister laid out an adequate outline of the state of the world and region today and he did so in six pages, positioning us in the world in which we live and in which we must find our way. He went on to review in some detail our accomplishments over the past year – he did not spend too much time on it - and in the next seven pages, and quite properly, he focused on the sectoral developments and agenda for 2014. Here he took some 60 pages for this, dealt with it quite extensively. He ended with some five pages of the measures for 2014 and two pages of reflections in his concluding statements.
This is a most logical layout, easily grasped and comprehensive, as our Minister of Foreign Affairs said yesterday. It was well worth the nearly three hours it took to be read. I wish that it could be arranged for every citizen to have at hand a copy to which to refer to from time to time so that he could be enrolled in the Minister’s call to the task of creating, by all Guyana, A Better Guyana for All Guyanese.
Even as our Hon. Minister recounted in his concluding sentences that was it not for the desire for brevity in the theme, that theme would have been, “By All Guyana, A Better Guyana, for All Guyanese.” I wish that he had not dropped that first phrase “by all Guyanese”. I regret it that he dropped it. The budget is a call for all of us to work and it shows the many opportunities where we can seek and find work.
My regret became more intense as I listened to many of the speakers on the other side. They seemed to focus on what should be provided to our people as if by magic from the air..., as if our people could be or should be or want to be just passive onlookers at the determination of our own fortunes or that of our country, to use the Minister’s words. They are wrong. It is in the building of Guyana that we learn, that we develop and demonstrate the capability of how good and powerful we are, or we can be, and that we come to understand that the road along, which the PPP/C has been taking our country, has been the road that we should be on, the road that has brought us the reward of eight consecutive years of steady growth.
Allow me, from time to time, to recall some sections from the Hon. Minister’s budget speech, for he has said many things so well that they hardly could be said better. I call on every one of us and all of our citizens to reflect on the word found in paragraph 7.6 on page 77.
“Mr. Speaker, everyday each, each and every single one of us has an opportunity to make Guyana a better place, for ourselves and our countrymen.”
These days we should have had “and women too”.
“Whether we teach a child to read or we repair an engine, treat a patient or saw some timber, pan some gold or cut some cane, paint a fence or sew some trousers, bake some bread or sell an insurance policy, create a job or open a business, build a bridge or carve a sculpture, we are producing and we are earning, and the more of it we do and the more efficiently we do it, the more prosperous we will be and so too our country.”
I think those words should be set to music and maybe become some kind of a song, our country’s song in these time. The speakers on the other side have been emphasising rights and entitlements and shortfalls and gaps therein, not wanting to recognise that rights and entitlements have to be produced and to be provided and the production and provisioning precede the employment.
There is everything right in pointing to rights. We, the party of Dr. Cheddi Jagan, are all for rights. We have demonstrated a passion for rights and entitlements and compassion. It is we who have moved the old age pension, removed the mean test and moved it along from where it was to what it is today. We know that in the commitment to rights, entitlement and compassion there must be a commitment to work and we have been doing the work to provide the entitlement and rights and make them real. It is not just talk.
As the old saying goes “we have to be doing well before we can do something good” and also we have to be doing well so that we could be in a position to do something good. That is what has been guiding the PPP/C administration over the last two decades. We will maintain and argue that it is in accord with all that Dr. Cheddi Jagan stood for. He was, most of all, a man for great discipline in all things. Thinking of right for food and nutrition, for example, for which I had the privilege to receive an award from the Food and Agriculture Organization (FAO) in Rome, Italy, last year, in recognition of the fact that Guyana had already achieved Millennium Development Goal (MDG) that refers to food and nutrition, we, in the PPP/C, in crafting this and all other of our budgets, have proceeded from the knowledge that there is cassava to eat only if someone would have taken up a fork, made the beds, ploughed it, tended it, reaped the cassava, cooked it and put it on the table. There is milk to offer a needy child only after someone would have brought in the cows, put them in the pen, cut grass and fed them, milked them in the morning and boiled the milk. There is work to be done and the reason why in our period of administration we have been so better is because we recognise that we have to work, there is work to be done.
We have smiled at some times on hearing stories about the traditions of old people in some of our villages chewing grain to make a fomentation pot. It is amusing but I think it illustrates the point and poses the question as to whether there is not something useful everyone could do. No one should waste any hour of any day in not working. I demand of the Hon. Members on the other side to join us in the call and the challenge to everyone in Guyana to do something useful each day and to do it pleasantly too, as much as everyone could do, whatever is that person circumstances. Yes, join us in the call for each person to do his or her duty as we sang and sing in our national service. We should always keep before us that the life we live and the experience here in Guyana is the life that we provide to each other in exchanging the goods and the services that we each produce and provide to each other. The life we live is the life we together create here in Guyana and complaints about poor goods and services and about life in Guyana are criticisms of us in Guyana and there should be calls for each of us to do better in whatever we do.
Budgeting is key to development at both the personal and national levels. It creates a lot of difficulties for us. In talking about having our law school in Guyana, we heard, yesterday, Hon. Member Williams talking about this Government not wanting to harmonise the pay to that which the tutors in the law schools in Trinidad and Barbados receive. We would like to do it, but there are difficult questions. How could we harmonise the pay of tutors in Guyana with those of tutors in Trinidad and Tobago and Barbados and not expect Hon. Williams himself to come leading the call for him to get the same pay as those people at this law school? It would not end there. It would go throughout all the judiciary. It would go to the University of Guyana (UG). It would go throughout our system and we will be back again on the road of spiralling inflation. We have to manage these things and we do things in good time. That has been the key of the People’s Progressive Party/Civic (PPP/C) – doing things in good time.
The Hon. Minister puts the imperatives of budgeting into perspective, into words worth recalling from paragraphs 1.7 and 1.8 on pages two and three of the Budget speech. It states:
“Every day chief executive officers of large companies, small business owners, and heads of households across our country grapple with the challenges of balancing amongst competing calls on finite resources.”
He goes on to state:
“Worthwhile investment opportunities have to contest against each other for funding, consumption needs have to be prioritised, and savings have to be accumulated for unforeseen difficult circumstances. These choices are not drastically different at the national level.”
We hear from Members over there all of the areas in which people should get paid more and all the areas where taxes should be reduced. That is what we hear from Members of the other side. What the Hon. Minister is saying here is that as much as we would like to, we cannot do all the good things we would like to do, not in this Budget. Indeed, perhaps, never in any budget. The issue is not that there are good things left undone, but which of the good things that have been provided for in the Budget we should have foregone. That is the issue. It is not about the good things left undone, but the good thing that we have included which we should have left out so as to accommodate something else that might have been judged to be more important.
Let me take some timeout here and commend our women, in particular our mothers. Many of us would think of our mothers, many of whom might not have been familiar with the word ‘budget’, but would have had to develop budgeting to a fine art as they contrived to make ends meet.
In paragraph 1.8 of the Budget speech, the Hon. Minister develops for the nation the tasks that he outlined in paragraph 1.7 with these words:
“As a country, we need to make the investments that are critical to raising quality of life for all our people. At the same time, we need to be constantly attentive to guarding the fiscal sustainability that we have worked so hard to achieve and that could so easily be lost if the wrong choices are made today.”
When we talk about the spiralling inflation we had in the 1970s and 1980s, it is not to cast blame on anybody, but it is to remind us, as a nation, that we have to keep the books balanced and that there are lots of things that we have to hold horses on, until we can do it sustainably. He continued:
“We need to implement the catalytic and transformative projects that will see a truly modern Guyana emerge to take advantage of the opportunities of the future and realise our long term growth potential. At the same time, we need to address urgently the local nuisances that affect the day to day lives of our people.”
This is what our Minister said and I find it very germane.
“In all aspects of productive activity, we need to endeavour constantly to do more. At the same time, we need to endeavour constantly to do what we do better.”
We need to be advocating and demonstrating that theme from Guyana Telephone & Telegraph Company (GT&T), Getting Better All the Time, if we, Guyanese, are to build a better Guyana for all of us in Guyana.
I invite all Guyana, whatever their political and other affiliations, to join in celebrating the successes of our country which we have together achieved.
Last year, 2013, was the eighth year of steady expansion. The Hon. Minister and all of us in Government are extremely gratified and we know that whilst we have sought to set out the enabling environment, we know that the success is a manifestation of our citizen’s response and their work.
I want to make some comments on the issues which the Hon. Member, who spoke just now, spoke to. He spoke about moneys in the various agencies. I would like to point out to him that these are moneys that have been accumulated over some years. I would like to point out to him, too, that there have been transfers, from time to time, to the Consolidated Fund. They should be seen as local reserves. I can tell you some things because I was the Minister responsible for mining and minerals and for the Guyana Geology and Mines Commission (GGMC). In the early days when we were under very tight strictures, one of the things that one could do was the amount of money spent on security and army. We had a situation where the Bell X12 helicopter was in need of one of the biggest servicing. Whether it was a, b or c, I cannot recall, but it needed a lot of money. Do you know where that money came from? That money came from the GGMC. If not, we would have also heard issues about the helicopter being there for one year and not being fixed. Money had to be got for it to be fixed.
More than that, one would read papers on budget financing. In all jurisdictions, it is recognised as a way of handling and, maybe, giving flexibilities to Executive – Governments – which they exercise for the good and benefit of the nation. Just go and read some of the things the former Prime Minister of England, Blair, did in England.
There is all this talk about corruption. You might recall, Sir, that there was an investigation and it seemed that people believed that not two cents but half of a billion dollars was involved in sales of aeroplanes and armaments and so on. At a certain time, Mr. Blair said that was it. To proceed further was not in the nation’s interest. Let us see what the developed countries are doing today when their interests are challenged and let us see what they did 100 years ago when they were comparably where we are today. Let us also look at that. Do not let us get carried away about the things they are talking about now.
Hon. Member Ramjattan spoke about spectrum and the spectrum auction in Jamaica. There are two ways, generally, of allocating spectrum. One is an auction and usually it is an auction for the period of the licence – 10 or 20 years. The second way is to charge annual fees. When there is a great attraction to getting to a place, auction is the way to go. When there is not that big attraction, fees is the way to go. In any case, it is not free money. Whether it is auction or whether it is annual fees, it comes out of the earnings of the company. It comes out of the charges that are paid. It is not free money that comes out of space. It is money that the customers pay, whether they pay it in auction fees or whether they pay it in annual fees; it is one way or the other.
Regarding the talk about the approaches, I would take the opportunity to assure you that this Government has been studying these approaches. We had an expert from India in. In looking at the charges over many states and countries, usually the total charges for telecommunications companies vary between 6% and 16% in terms of the average take for government on their annual revenues that the customers pay. We have been looking at this matter fairly earnestly, Sir.
On the question, too, of properties in the mining and natural resources area, here again our approach has been, particularly seeing that Guyana has not had a big record in success in these areas and no big economic activities in this area, what is one way of doing it too. That is on a first-come-first-served basis. The first person who comes and applies - generally, not too many people apply - is given consideration. We did try, I think in the 1980s, some oil auction but, as far as I know, it did not go so well because Guyana did not have a name and a tradition as yet in oil business and many of the businessmen asked why they should put all of that money up in front. They said it was better for the country to allow them to keep the money, not pay big auction fees and invest it in the prospecting so they could know if they had something. When they knew they had something, the country could pick it up in royalties.
Let me tell you some more. Regarding the people who write those kinds of reports, we have to take it with grains of salt, like Hon. Member Greenidge had said sometime. In the case of mining and oil properties, in the 1990s, when we were not having much happening, our friendly bilateral countries and multilaterals would come and give me advice and they said we needed to be more attractive, we needed to cut royalties, we needed to give more incentives so that people would come. They said we had to do more to attract people. Then, in 2010, when it seemed like oil would have been found tomorrow, somebody just had to strike the ground somewhere and oil would gush up, those same sets of people came around and told me that I have to look and see how much I can get. Whilst contracts are sacred, maybe, I could have read it over and see if I could have gotten more than I had committed to before.
These, again, were the same multilaterals and the same friendly governments which came and advised me in the 1990s that we should be giving more. They came back in 2009 and told me that we were giving too much and we should read the documents again closely. One of them did feel a little bit uneasy. He said that contracts cannot be broken because they were sacrosanct, but I could always read it a bit more closely and I might find that I could have gotten more than I thought I might have gotten when I first read it. Comrades, let us get realistic on what the world is really like.
In terms of our young people who are leaving, it is time we think about this in a more developed way. If someone has a son or daughter who is doing well, whether as an accountant or physicist, engineer or doctor, chances are that they are going to be encouraged to go and see if they can cap their names in the stars and headlines in some one of the developed cities in the United States. We are under the same pressure like people in some county in Alabama or Dakota in the United States. The young people go and remittances come back too. We have to develop a much more up-to-date view of the world and our position in it.
Continuing my advocacy of our Budget, I want to refer to and commend our continuing large allocations to education and health so that we and, more so, our sons and daughters would be healthier and better equipped to build this land of ours. We may see the allocations to infrastructure as investments in improving of our world, investments for the future.
I think, on the other hand, our allocation to culture, youth and sport is dedicated to the enjoyment and satisfaction of the present generation of Guyanese today, even as I agree with the Minister that there is therein in culture, youth and sport, a basis for development of careers in culture and sports and also culture and sports industries. But I see that as giving ourselves some satisfaction. In the discussions about growth and development and high saving rates, they also say you have to keep people happy and satisfied so that they would continue working and living with enthusiasm. I think there is a good balance in the allocation to culture, youth and sports.
The synthetic athletic track being completed at Leonora, together with other major facilities built in the last decade, and some others that the Minister has in the works would equip Guyana with a complete set of facilities for major events of which Guyanese can be proud.
There is much to be pleased about in Guyana. We could be pleased about our larger private enterprises and also about persons who we know in the private sectors. But there are also many smaller persons, self-employed, who are worthy of celebration, too, and from amongst whom we would look to arise many of the bigger businesses of the future.
In my walks about the town and elsewhere in our country, I am pleased to note how improved the various displays at our arcades, malls and mini malls, their selection and pricing of items calculated to meet the pockets of all citizens are. Indeed, I hear now that in some ways things have reversed and people from Barbados come to Guyana to shop when it used to be done the other way around.
There is much about which we can be proud and our pride should be the basis for us to accept and work for a higher level of order and discipline. As past Minister with responsibility for mines, I want to join in commending our small and medium scale gold and diamond miners. But, the very growth in mining and the number of dredging operations have brought us to a point where what we used to do, we can no longer do. The bar is being raised and we have to get up to that higher bar. We have to reduce the negative environmental and social impacts and, in particular, let me say – and I hope I have built up enough trust with my friends in the mining industry – we have to give up our kaimoos and accompanying shops which are often sources of alcohol and drugs and points from which crime often originates. We have to do that.
I want to say that I was in Imbaimadai with some of my other colleagues, briefing the people in the villages on the proposed new Upper Mazaruni hydro development. We landed and were met by one of the old miners there, Mr. Tafares, and he said to me, “Did you notice our town as you flew in?” He said that many people from elsewhere in Guyana, the coastland and so on, live there 10 to 11 months a year and it is time they start thinking about themselves as residents of Imbaimadai. They have started to do it and now there is a big town. It was quite striking. We have had other people too, like Campton Mendonca, who, maybe even 20 years ago, had deserted the coast for Imbaimadai at Christmas time. Good things are happening. It calls for some patience and it calls for talking and interacting and building up a sense of being on a team.
Something of which we could not be proud is the way we drop our garbage all around our city and through most of our coastland and inland towns. Both money and a major change in attitudes and behaviour are required to get to a higher level of responsibility and to reverse this shameful blot on our nation. The Hon. Minister has provided a lot of money - $1 billion in Budget 2014 – of which $500 million is for the city of Georgetown. We, the citizens of Guyana, have to provide the change in our habits, behaviour and practice. At the end of this clean-up campaign, we should have systems in place to allow us to stay clean so that not only Georgetown, but all of Guyana would be worthy of being thought of as garden city and garden country, a city and country which tourists find pleasing and welcoming and one in which they feel safe.
There is great reason why we should celebrate our achievements and become comfortable with them. There is a reason why I want to talk about this and why I want us to feel comfortable. It is because we have been talking about Foreign Direct Investment (FDI). With foreign direct investments come the people who bring the investments, the ones who have the money and the ones who have the techniques and technologies and practices and systems and so on.
We need to feel secure if we are to consistently welcome foreign direct investment. With a population of about three quarter million – and I am not going to get in the row as to whether it is 750,000 or 760,000 and all of that; I have not had a preview of the census – in this large country of ours and given the world of today, our economy and society could not but be open to the world and very open to the world. I do not know if my good Friend, the Hon. Minister, would talk sometime about the openness of economy. Maybe, I am thinking we are like 35% open, where only 35% of our goods and services are produced locally or something like that. This is certainly not my field. Many of our people have gone to all parts of the world, have found welcome and have done well. We, in turn, need to develop an understanding that would allow us to welcome, consistently, people from all over the world to help us to develop this country and to allow us to enjoy much of what the world has to offer today. There is a need, at all levels, for us to think about this.
At many of our meetings and business forums, we speak about the possibilities of Guyana becoming a bridge head between Brazil and South America and the Caribbean and North America. But as we travel down some of our streets, even coming from one of those meetings, and we see some Brazilian establishment, we, including members of the private sector, grow uneasy. We have to resolve this so that we could be consistent. This is a job we have to do amongst ourselves. Apart from recalling that there are Guyanese citizens all around the world – in neighbouring countries and North America - we must develop an understanding which enables us to consistently welcome foreigners who come with foreign direct investments to work in partnership with us.
As we grow and develop to higher levels, as we have been growing, we have to look at issues in greater detail, and become more nimble with our limbs and adroit with our brains. Whilst we should always be looking to simplify issues, we must also look to the fuller story with its greater complexities.
Let me speak for a few minutes on some things - and I am afraid that I might be treading on difficult grounds, like Hon. Member Mr. Lumumba was saying. As someone who would have seen more days in this Parliament in the past than days to come, maybe I owe it to myself and Hon. Members to speak about difficult subjects.
Let us talk about the Marriott Hotel. There have been complaints about Guyanese workers not being in the team that is involved in building the Marriott Hotel and I could see some good feelings in that. We want to become the Guyanese team that built the Marriot, the sense of achievement and so on. That part is good but it would take a decade or so to build such an efficient team and then it would be uncertain as to whether we could find work in Guyana to support that team. The question is: what do we want? We want a hotel that is built very well, in good time and with good costs. Just as you may want a car, you import a car from some other country or a flat screen television, you do not say that we must build our cars or we do not get that feeling but I can understand that the building is there and you have a feeling that we should be building it and that part is good. If we challenge ourselves to develop that kind of quality and the team spirit, that part is good but we did not lose all in building the Marriott Hotel. Guyana and Guyanese were not shut out. The bulk of concrete and the filling cement blocks were supplied by a local contractor – a bidding that we did not have anything to do with, Comrades. It happens to be that it was just located half of a mile away so this was not any corruption. I do not see corruption here. Apart from this, a team of engineers from Trinidad and Tobago, mostly men - I do not think there were any women - about 35 to 45 years old, came to see me to sell themselves and they were proud to say that there was a Guyanese born amongst them. They were proud to say that they had responded to the invitation in Trinidad to provide the design for the foundations of the Marriott Hotel and they had won it. They told me that they were very proud about it. There was also a presentation to [inaudible] in the design and construction of the Hotel, which, I understand, was well received.
There have been two mentions of bauxite in these debates and, as someone from the bauxite industry, 25 years, working there from 1967 to 1972 and the past Minister of Mining, again, I have a duty to speak to bauxite issues and the difficult issues which were raised by Hon. Members on the other side.
Firstly, the incident in Aroaima: the Hon. Member Trevor Williams, in his recounting, spoke - and I think I heard it right although I would like to read the Hansard - about the manager striking workers with his spade. That was not so. There was no striking with spades. There was threatening. We accept that there was a threat about it. The manager was angry. Disputes between managers and workers are to be regretted and, indeed, I encourage the Minister of Labour to do whatever he needs to do. I was the Minister at the time, for mining, and I could say this: something that always causes, at least in me, some hesitation, and I would like it to be demonstrated to be not so... But I recall in the run up to independence and nationalisation, we tolerated, encouraged, promoted, a lot of activity and behaviour that should not have been but those behavioural patterns and conduct were accepted because of the just cause of ‘Guyanisation’ and nationalisation later. Once one gets into certain habits and behaviour, they do not just die when you sign the document and nationalise. They persisted after nationalisation and they were one of the problems there and we had, even there in that time, unions being taken off the books and not being recognised and so on. This is something that we have to change and I think it is much more extensive than we know. We have to work at our discipline of our labour. We have to create a different sense these days because if we are going to invite FDIs, we must realise that they are coming here at our invitation and, at least, we need to treat them decently.
It brings me back to the issue of ‘Asiaphobia’. Let me say something else, Comrades. Again, I think we read certain documents and we put our brains to one side, not that I am known to be someone who is against people, but if one looks at the timings, up to about the 1970s, all of our forestry Timber Sales Agreements (TSAs) in Guyana were held by Europeans, English in particular, and Americans, and it was just about that time that times changed and people from Asia started taking up the TSAs in Guyana, and it was just about that time, partly coincidence, that all the issues came up about environmental this and that and forestry checking and so on. It all came up at about the same time. One has to think if it were all coincidence. I think it was some coincidence, but I do not think that it was all coincidence. It was a response to the growing capability of people in the Asian countries. There must have been some of that and we should not take up ‘fire rage’ for other people. We should not take up ‘fire rage’ for other people, other people who brought our fore parents here as slaves and as indentured people. We should not be taking up the ‘fire rage’ for other people.
I am not saying that we do not be friendly with everybody. In fact, I want to say we are friendly with everybody but we keep our own counsel. That is what the PPP/C does, follow in the footsteps of Cheddi Jagan - keep our own counsel.
Secondly, Hon. Member Dr. Roopnarine questioned about RUSAL and BOSAI not proceeding with the aluminium plant and the hydropower project and the smelter that we talked about and I could understand it. I would like to have it maybe more than anyone else in Guyana now. I would be happy to go and work and have an aluminium plant to go to work in after this career in politics. But the studies were done and they did not come out sufficiently attractive and it is known that our best days with bauxite were in World War II, so it is difficult. It is a difficult issue. Our bauxite has a premium in a mix with other bauxite but it is a disincentive, an extra cost. When one uses it in an aluminium plant here in Guyana, one has to bring other things in to blend with it and so on.
I have another note here on forest because we have talked about people buying imported doors in Guyana. Imported doors in Guyana cost about 60% - 70% of the local equivalent but there is a reason for this, a good reason for this. It is that 90% of the moneys in forestry, including paper, comes from forests in temperate countries and 80% of them are planted and when one cuts trees in a planted forest, the productivity is huge, but when one has to go typically half of a mile or more for each tree in our diverse forest in Guyana, the cost is exceedingly high. One has to write off about a half mile or more of trail against every tree; so the costs are higher and that is why. If we think about this and accept this, it will give us ways of managing so maybe we would not feel uncomfortable and unhappy about using pine wood in Guyana where we could and we could sell all of the local wood we have to companies abroad where they can convert it into special things and, in terms of the usual words, they could be sold into high end areas.
There are lots that we have been doing that we could be happy about but we have to develop a higher level of knowledge and understanding of situations and we can do it. I am sure that we could do it.
Let me speak a bit about electricity and energy and about this Government’s programme to steadily improve and extend along a sustainable path a supply of electricity to every home all across our country. Our general aim is to provide, where needed and as our budgets can carry, the first capital installation and to provide, monthly, a certain minimum quantity of electricity at a highly subsidised charged or at no charge at all. Customers can utilise additionally as much electricity as they can pay for but those additional quantities must meet the full cost of service, although, in practice, that full service cost is also capped and subsidised to some degree.
Electrification in Guyana has been advanced steadily over the last two decades. About 95% of homes in Guyana now – this is all across Guyana – have some degree of electrification. About 80% of our homes and other buildings are supplied by GPL with its customer base today of 175,000. The growth of GPL customers over the last two decades is evident in the increases from 75,000 or about in the year 1992 to 120,000 in 2000 and 175,000 today. These increases did not just happen just so but we provided, under our Unserved Areas Electrification Programme (UAEP), the opportunity for some 40,000 not so well off Guyanese families to have connection to GPL.
There are about 12,000 customers on the Linden, Kwakwani and Ituni grids in Region 10. There are about 15,000 homes with Photovoltaic (PV) systems across the hinterland and about 5,000 on mini grids, such as that developed at Lethem, Mahdia and Port Kaituma and there are some micro grids which were initiated by Amerindian villages for their village courts for which they sought and received our support – Moraikobai up the Mahaicony, St. Cuthbert’s Mission on the Mahaica, Orealla and Siparuta of the Corentyne and a number of others that have been knocking on our door to get working with them.
In this 2014 Budget, there are, in the capital budget, allocations totalling $4.350 billion in the Office of the Prime Minister (OPM) budget. The largest part, $3.850 billion, is for capital investments in GPL. There is also the Current Estimates of the Ministry of Finance as a contribution to local organisations, a total of $3.176 billion, $2.830 billion for Linden and for Kwakwani is $346 million to subsidise the provision of electricity in those areas. Let me say that the $3.850 billion capital allocation for GPL is neither a handout nor money being thrown down a black hole. It is a quantity of money which GPL, in 2014, ought to be receiving from tariffs. The tariff calculation established at the time of GPL’s privatisation, which is based on international practice, sets the annual tariff adjustment of GPL for 2014 at about 12%, which will provide GPL with $4 billion more from increased tariffs. So, GPL, if Government would allow the tariff to go where it should be, would get $4 billion more this year, which is just a little bit more than the $3.850 billion that is being allocated from the Budget.
I know that Hon. Members can say that there have been large allocations to GPL in every year since the core investor departed and handed his 50% share to the Government of Guyana for the proverbial dollar and leaving behind, on his account, something like US$30 million to his credit. I say that just to show the judgements that he has made. The total provisioning to GPL over these times would have been more than $40 billion but, on the other hand, and it is also a big hand, Government, according to long tradition and practice since the early 1970s, has been keeping electricity charges to consumers suppressed, at times by up to 30%, so whilst the Government allocations to GPL have totalled over $40 billion during this period, the net total suppression of tariffs, the net foregone revenue of GPL, has totalled about $27 billion. One might say there is still another $15 billion - $20 billion to talk about. What about that? But GPL has been growing and expanding over this period and Government, as owner, has had to provide the financing for GPL to be expanding. To name two of the biggest expansions, there are two new generation stations at two locations, over 40 megawatts, and there is the transmission upgrade being completed now and there are other things happening.
Capital improvement over this period totalled over $28 billion and this has come from Government, through these same types of allocation, and it is a responsibility that Government had to do. Even so, we, in Government, constantly question whether GPL, the management and the workers are doing well enough with the resources made available to them. We keep pressing for better performance and we look to benchmarks. The best we could do is to look to benchmarks. We look at how GPL is doing in both the cost of providing electricity and the tariffs we are allowing to be charged in comparison to utilities in other countries, particularly across the Caribbean.
We would like to have – and I know our private sector always calls for this – the costs and tariffs, as in Suriname and Trinidad and Tobago but Suriname has a paid up hydro of about 160 megawatts and also some local oil and Trinidad and Tobago has lots of gas and they still have some medium amounts of oil. So we cannot compare with Suriname and Trinidad and Tobago and that is why we want to get the Amaila Falls Hydropower Project in. That is why we are persevering and persisting to get Amaila done. It is because you, in the Opposition, and the people of Guyana want to have the lower cost of generation that we could have, generation lowered from $0.22 - $00.23 per kilowatt/hour with heavy fuel oil in the sets versus about $0.12 and less from Amaila Falls. We want that and that is why we are persisting.
Returning to my script here, we should compare our GPL with Barbados and Jamaica and if we do that, we will find that we are doing reasonably well. We are somewhere between Barbados and Jamaica. We are in that order.
Another indication that the board, management and workers of GPL are not getting away, let us say, with murder or not doing too badly is the fact that almost continuously over the years, one or more energy and electricity specialists from within the IDB and one or more consultants retained for various programmes by the IDB have been studying and reporting on all aspects of GPL’s operations from corporate governance structure through generation, distributions, losses, customer relations and quality of service. Sooner or later, and often very soon, all of these reports are published and are available on the websites of IDB, GPL and the Office of the Prime Minister. Two years ago, we had that corporate development plan that some people interpreted as saying that GPL is no good, which I felt a little bit uneasy about before. But what did it say? It said that GPL needed a further US$150 million – US$250 million of investment and it needed a dozen high-flyers from the United States of America or North America, somewhere, or Europe, and the interpretation of that is that we are doing pretty well with what we have. We are doing reasonably well with what we have.
The other thing, too, is that GPL is fully under the Public Utilities Commission (PUC) and submits to providing for each year a five-year rolling development and expansion plan with a 15-year perspective and this gets into the public arena. PUC holds three public hearings – I think there was one about three weeks ago – at set times each year on the total operations of GPL and a once per year public reviewing of operating standards and performance targets and PUC adjudicates customer complaints and applies customer service standards. So GPL is under continuous review by experts and consulting groups. We should know that when we suppress the tariff and we do not give any money, the company can only run down and that is how the Guyana Electricity Corporation (GEC) and all of Guyana were in 1992 when we came into office.
Let me say as well that providing the money this way to GPL also helps to reduce costs for eventual costs to the customer because these moneys are onward here to GPL at interest rates between about 2% - 4% because these moneys, $3.850 billion to GPL, come from the Chinese Export-Import (Exim) Bank with respect to the completion of the transmission upgrade from the IDB, particularly in some ways of dealing with losses, trying to understand and reduce losses, and from our PetroCaribe accounts. This $3.58 billion is for investments in completion of the transmission upgrade, a new substation at Williamsburg, an extension of the substation at No. 53 on the Corentyne Coast, completing a current loss reduction pilot programme with the IDB, including piloting of smart metres, and installation of additional generators at Leguan and Wakenaam. We heard about them before. GPL, this time, is going to put additional generators so that they can get 24/7 electricity. We are putting in the money. I want to thank citizens on the islands for their long patience with having a less than 24-hour a day service. We did put in two new units at Anna Regina, but that was 20 years ago and we now have to put another station with two new units again. We have to do some things at Bartica and GPL has been working in Bartica.
What will happen? The Opposition has been saying that it is going to cut this allocation for GPL. I have put the arguments there that show clearly that GPL is no inefficient operation and it is well worth this money to make up for the suppression of the tariffs. It is well worth the money to make up for the suppression. I say to the Opposition and I will say this to all the people in Guyana: if you are to cut this money for GPL, there will be no opportunity to make the investments at this concessionary charge of 4%. I hope that if they cut and if in our need to supply to make these investments and to improve the power supply in the Corentyne, Leguan, Wakenaam, Essequibo and Bartica, that if we go out to get this money and we get it on the private market at 15% - 25%, they would not come back and shout ‘corruption’. I hope they would not come back and shout ‘corruption’ because this is 2% - 4% interest. If you force us and we have this need to be provided, what are we to do? If we go to the public and we raise the funds and these funds are raised at 15% - 25% - that is the order and that is the practice - then do not come and shout ‘corruption’.
I think that I have said enough. I would say that we have said enough but, maybe before we finish, let me talk a little bit to this question of this new dispensation and what has been the experience. I think I can speak about it without the notes. In 2012, Mr. Speaker and Hon. Members, you would recall that tripartite meetings were held around the budget and you would recall, and I remember, that it was interesting that the two parties, APNU and AFC, made their presentations then and presentations which kind of held the same line in subsequent meetings in the following year and, generally, APNU Members said that they do not want to talk about specifics; they wanted to talk about broad principles on approaching a budget for our nation, priorities and so on, and that was quite okay. The AFC spoke more to deals, negotiations and tradeoffs and that, also, is okay; that is how the world is like.
Sir, you would recall that in 2012, as we were making our way along this discussion, we accepted the pushing from the Opposition Members to increase old age pension. It is not that we did not want to; we wanted to, but maybe we were too disciplined. Maybe that has been the fault of the PPP/C. But we accepted increasing it and the Hon. Dr. Ashni Singh read a statement on the commitment about making the change. As we continued the next day, we spoke about the need to start a reform of the electricity supply in Linden. And it was accepted that we need to get on with the reform because we want Linden to grow and develop, but it must grow and develop on a sound basis. So we had acceptance. I hurried up and got some things done and we had it reviewed by my two Friends on the other side. Our friendship goes back a long way and I do not think any experiences in this House here will break our friendship; our friendship goes back a long, long time. We had them review it and I read it, and it stood. But it appears to us - we do not know for sure - that someone from the AFC called to Linden and told them that Granger and APNU just sold out on them. We know what happened after that. So all this talk about this Government being arrogant and not being prepared to compromise…
Mr. Speaker: One second please, Hon. Prime Minister. I recognise the Hon. Leader of the Opposition.
Leader of the Opposition [Mr. Granger]: Mr. Speaker, the Hon. Prime Minister has been repeating this story for over two years. A Partnership for National Unity never engaged in and never signed any agreement. The Prime Minister drafted a statement which he read. APNU never entered any agreement, never appended its signature to any dates or any agreement. Dr. Roopnarine and I went to Linden and explained that; there was never any agreement.
Mr. Hinds: I accept what the Hon. Member says but we are talking about accommodation and compromises. The most important agreements in this world have been done on a handshake, nothing signed. And Mr. Speaker, the statement was read and allowed to stand at the time. From some of the movement I saw at the side of my eyes, it appeared that somebody from the AFC benches went and made some calls. The two Hon. Members had to run up the same afternoon to make sure that something green and everything green were not burnt in Linden. So, all this accusing of this Government as being the one that is not compromising and that is being arrogant is a questionable basis. Ordinary people must question that position. I would say this, Sir: clearly, the ball for compromise on the Budget is in the court of the Opposition. I call on them to make recompense; it is their turn to do something, to compromise now, and to make recompense. Let this Budget pass because it is going to be difficult for them to cut it; let this Budget pass and, as soon as everything is over, let us resume our talks.
I thank you very much. [Applause]
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