Budget Speech Hon Prime Minister Samuel Hinds- 20123204 11 Apr, 2012
April 11, 2012
Prime Minister and Minister of Parliamentary Affairs [Mr. Hinds]: I rise to add my support to Budget 2012 in which our Minister of Finance has so ably presented a review of our progress in 2011 against the background of events in our region and the world at large, and our plans for 2012, with accompanying projections and estimates, all of which are directed towards us Remaining on Course while being United in the Purpose of realising Prosperity for All. Even as we look back from whence we came, from where Guyana has come, and look forward to where we would like to be, different persons may advocate differing courses to be followed.
Allow me to submit, with modesty, that, with the trend we have achieved positive growth and development, averaging 4.4 per cent over the past five years in the presence of various adverse regional and international events, there is reasonableness in the call to remain on course. No doubt, there will be dangers and concerns as we travel along the path. We should be on the lookout, and on guard, and, indeed, the Government welcomes concerns and dangers being pointed out. Nonetheless, I would plead that we forego demands for changes which seem to be only for the sake of change.
On listening to the presentation yesterday I feel that it is necessary for us to remind ourselves that our present tax structure favours the low income earners and is a powerful instrument for redistribution of earned income. Let us look at our main tools.
Income Tax: No income tax is payable on income below the threshold, which is raised from time to time, and is now being raised to $50, 000 per month. Everyone pays nothing on the first $50, 000 earned. Persons earning more than the threshold pay a flat one-third on each dollar, a simple tax system. Value Added Tax (VAT) at sixteen per cent on all goods and services consumed, that is, outside of a list of basic zero-rated goods and services, in which the list can be extended from time to time. So someone earning $50,000 per month or less in Guyana can live lawfully paying zero tax - no income tax, no VAT. Someone earning a lot, and consuming a lot more, can be paying, on a margin, thirty-three and one-third, plus sixteen - forty-nine and one-third per cent on money he spends. So there is, in our system, some progressivity already. But note that savings not be expended would not incur VAT. That is on the taxation side.
On the side of access to benefits, all citizens have equal access to all services provided by the Government, such as education, health, infrastructure, housing and water, irrespective of the quantity of taxes they are paying. So this is a powerful mechanism for income distribution. More so, in a number of instances, for example in housing, there are better arrangements for low income earners and even more so when some of the higher earners choose and pay for private services in education, health or housing.
The propose changes in our present tax structure, in which we heard Members on the other side calling for, will not bring any more favourable circumstances to our low income earners. As we speak of Government services and private services, allow me the following observations on the question of value for money and poor service from Government facilities of which we heard so much about yesterday.
When I heard the presentation from Hon. Member Dr. George Norton about what is happening at the Guyana Public Hospital Corporation (GPHC) I was very much taken aback. Dr. Norton works there, he should know and he would speak truly. We too have all heard some disturbing story, or another, such as the one Dr. Norton told us about the child waiting at the Accident & Emergence (A&E) from about 11.00 a.m. until about 5.00 p.m. for treatment. Such should not be. I agree with him. There should not be even one case like that, but how are we going to remedy that? Where must we look to remedy it? I was comforted, some, when Hon. Member Dr. Mahadeo spoke subsequently and he recognised shortcomings in health services delivery and areas for improvement, but he highlighted that… Whilst Dr. Norton spoke truly, he spoke selectively. Similarly, the presentation of Hon. Member Ms. Kissoon from Linden, all the things that she complained about should not be, but she should have spoken also about there was no maternal death last year at the Linden Hospital.
I would like to point to the example of our well known teachers Wilfred Success of West Ruimveldt and Maydha Persaud of Abrams Zuil with whom I received national awards last year. When we think of those two teachers who would have received no greater pay than others and would have had no exceptional facilities, nor students to work with, yet they have achieved great success in the performance of their students and where they could, many other could. We all could, whether it is teaching or in the health services, and in whatever we do.
Whenever there are options before this Government to choose between various arrangements that have little difference, it has never hesitated to be partial when a Guyanese option is on the table. We have always been bias for Guyanese workers, Guyanese contractors, Guyanese businesses and, in turn, we demand that our workers, our contractors, our businesses owe it to us, to themselves and our country to do their best and we are let down, from time to time, but many more times our people deliver.
Thinking again of that child who waited from 11.00 a.m. to 5.00 p.m. for attention, there must have been any number of different levels of staff at the GPHC who could have acted. People could have acted; workers there could have acted. The question for whom do we work is a most important question which all of us should ask, for we are all workers. Yes, we work for our boss and our boss’s boss, and maybe for our Minister, and we all have job descriptions and we all work for money; but in the case of that child we also work for her, to relieve her of her pain and set her off to be well again as best as we could, and as quickly as we could. Like the esteemed teachers, Wilfred Success and Maydha Persaud, we should not restrain ourselves from giving service many times the value of whatever we are paid and in whatever circumstances we are working.
There is something else that we should have noticed from the Hon. Member’s presentation, that is the Hon. Member Dr. Norton, and that is relevant to concerns about employment, unemployment and job creation. The Hon. Member spoke to shortage, perhaps a third, of nurses and other supporting staff. These are jobs begging to be filled. We see also advertisements in the newspapers, inviting applications to work. The problem then appears to me, not only a problem, that it is not a question solely lack of jobs opportunities but lack of people willing and able and prepared to work for their fellow Guyanese for earnings which their fellow Guyanese are willing and able to pay, and under the conditions which their fellow Guyanese can provide. This is the position from the very beginning, under our late leader Dr. Jagan, that we always took that we look to the Guyanese to work for their fellow Guyanese for the pay that they could afford and with the means of the resources that they have. This is what distinguished us of the PPP/C from the other two parties on the other side.
This Government has been biased for Guyanese. We consciously modified many of the programmes we inherited in 1992 to give more Guyanese workers, contractors and business persons the chance. So when workers, contractors and businesses failed we are very disappointed, but we do not reverse our course; we do not throw our hands up in the air, but we keep the faith and seek to correct, and this is my challenge to the Hon. Member speaking on the other side - do not give up; keep the faith in our people. Let us learn; let us correct; let us stay on course.
We found that there is much for thought in the opening presentation of the Hon. Member Mr. Carl Barrington Greenidge, but we quickly heard effective responses from Hon. Minister Irfaan Ali. The Guyana Chronicle today uses the term “crushing” but I would prefer using the word “anticipating”. Minister Irfaan Ali had anticipated many of the things that Hon. Member Mr. Carl Greenidge presented, and why was it that we could have anticipated was because we too pondered the same considerations as we arrived at our preferred position at any given time and circumstances. So we could anticipate and we could answer immediately.
Let me say that there are two things the Hon. Member Mr. Greenidge’s presentation that we are thinking about, and we should think more about. His presentation on the income redistribution, if I heard him correctly, the top twenty per cent of people in Guyana earn forty per cent of income or wealth; the bottom twenty per cent earn only seven per cent, implying that a middle sixty per cent earn fifty-three per cent of income and over fifty-three per cent of wealth. I am not sure what it referred to. Minister Irfaan Ali was right. If this income or wealth distribution is correct then it might be one of the flattest, and most even distribution, there is among different countries and indicates the recreation of a large middle class in Guyana.
We took note of the Hon. Member Mr. Greenidge’s suggestion that in subsidising the consumers of the Guyana Power and Light Inc. we should think of structuring tariffs, or amending tariffs, so that an initial quantity of electricity is very heavily subsidised, even at no charge, so as to give a base to everybody. At the end of the debate the Hon. Minister of Finance said to me that that was a good suggestion. Let us see how we might restructure or amend the tariff structure accordingly. We already know some answers because when we were considering electrification in the Hinterland the then President said, “Let our subsidy be used to provide each household equally a certain quantity of electricity that the subsidy could pay for and everyone should pay full cost for every kWh more that they consume”. So we welcome the suggestion from Hon. Member Mr. Greenidge and when we would have passed this budget we look to a quick engagement on a relevant amendment to the tariff structure.
The Government is heartened by the progress Guyana has made during the nearly two decades of the PPP/C administration. The per capita GDP in nominal terms rising from about US$300 in 1992 to US$2,870, there about, at the end of 2011 is a more than nine-fold increase in the numbers, but we know that the US dollar too is depreciated. Even if we take account of that, we are still looking, maybe, at a three-fold increase in production of goods and services by the people of our country and the income that we, the people of the country, have. That is very significant because it reversed what was, maybe, a twenty-year trend in the opposite direction before that. Even though we have made progress, all of us know that we are still far from where other people have reached, through their course of history, working and learning and steadily improving. We are not yet producing half as much, maybe, a tenth of much, of what we need or what we would like to have.
No one would find all that one would desire in our budget. That could not be a test of our Budget 2012 – that we get all that we want or even need. The test, however, is how even-handed has the Minister of Finance been in meeting, in part, the needs of all of us. I think, more importantly, how even-handed our budget is in providing opportunities where all of us Guyanese might apply ourselves and work and grow, and make employment for ourselves, and perhaps others, and where we could find employment, maybe.
This is a particular point when one heard the presentation, just before me, of Hon. Member Mrs. Volda Lawrence. It spoke about all sorts of rights, but there are no rights - nothing - unless somebody is working for it. If we want a better life the focus to get people out of poverty is to make them productive – create conditions so that they could be productive. The Government urges each and every citizen to forsake anyone who would seek to dampen his or her spirit with claims, whether of discrimination or marginalisation on the one hand - as you know, we say on the one hand discrimination and marginalisation - and in another place we say “You have been taken for granted.” Either way such claims, dampening enthusiasm and participation, lead to self- fulfilling lack of individual success, while others get on and the feeling come on that we have been marginalised; we have been discriminated or we have been taken for granted because we have been dampened by people, my Hon. Members on the other side. People do not participate or they hold back.
The Government believes that everyone must make efforts: must strive, must contribute and find great satisfaction and, indeed, purpose in life and grow individually and all together, as a nation. We feel good and we progress even faster towards everyone prospering.
Taking account of our history it will be surprising if there was not much suspicion and mistrust in our society about these things. Suspicions, there would be, but as the good books states, as you know, woe unto those who fan and ferment suspicions without any basis. But we must adjust even as our fears are dispelled. It is in this light that we should see reference by the Minister of Finance in paragraph 4.144, under “Other Institutional Reforms - Governance”, that in the same period of the last Ninth Parliament over three hundred questions were put to Ministers and all were answered. Even as we begin this Tenth Parliament there has been a huge cry about corruption in a number of large projects which Guyana needs and on which the Government had embarked. Many were loud and let their imagination run wild, being sure of corruption in their questioning on the Amaila Falls Project, the road, the Cheddi Jagan International Airport (CJIA) upgrade and the Marriott Hotel, but quiet quickly those questions were answered and there has been the deafening silence since. Some persons should have at least been saying we were mistaken in thinking and in assuming that there was corruption in those agreements, and at this Easter time - someone referred to the Easter time - we can only think about Thomas, as you know, saying let me put my hands on the side of with the holes, and so on. Well, we were asked the question and the answers were given.
Mdm. Deputy Speaker, Hon. Members, allow me to address a different angle on our motivation in the pursuit of a Marriott brand hotel. Permit me to refer to the article published in Easter Sunday, April 8th, edition of the Kaieteur News. “Robert Badal spends US$8M to upgrade Pegasus - Sees Marriott as a ‘sour grapes’ project.” “Sour grapes” in that Pegasus is being taking to a higher level. If tourism is to be developed, as we are all hoping, and as laid out in paragraph 4.37 to paragraphs 4.40 of the Minister’s speech, it would mean not one but two or three, or four, additional internationally known brand name hotels. We just need to check out the number of international brand name hotels in neighbouring Paramaribo. In order for us to attract the international business investors and tourists who stay, or who look to the presence of internationally renowned hotel chains as an indicator, whether they should go or not, we must proceed along this course. We must build if we will have them come and at the same time our local hotels are getting exposure, such as Pegasus itself, Grand Coastal and Sleep Inn. They are all encouraged to rise to the challenge of higher levels.
The growth and development which we have been experiencing, and the more that we need, bring changes and problems, contradictions, and so on. The challenge is to resolve them in constructive ways. We in Guyana have had a tradition, as you know, that heaven is achieved when something or somebody is the only one. We have to put that aside. Guyana, with prosperity for all, will have many, not just one. As I said, in my contribution at the ceremony to commission the new, and I would say it, really exquisite amorous restaurant at the Pegasus and to announce the upgrade, and rightly second tower, differences in view between the Government and Pegasus had been quite apparent. Nevertheless, without any reservation, I could only do this: I recommended and congratulated Mr. Badal and the steps he has taken.
For I recall a similarly sharp confrontation between the Trans Guyana Airways (TGA) and the late President Cheddi Jagan at the commissioning ceremony of TGA’s new hanger, back in 1993. Trans Guyana Airways waded to President Jagan, demoing the Government’s neglect and seeming indifference in local aircraft industry. Dr. Cheddi Jagan, full of experience and wisdom, challenged TGA, and others, to look beyond charter service for the more privileged and better financed and to see good business in meeting the needs of the ordinary people in the Hinterland by instituting schedules services. Few would disagree that it was this confrontation, that challenge between TGA and the late President, that has led to the much developed and expanded local airline sector and the Ogle International Airport Inc. which we have today. Ogle International Airport Inc. and the local airline industry are on the verge of going regional.
Our challenge is to keep before us our common purpose and find resolutions and reconciliations which bring benefits all around and stay united in purpose and realise prosperity for all.
With initial suspicions over our many large projects now put to rest, let us all put together in bringing about the rapid, efficient, effective execution of the Amaila Falls Project, the new CJIA and the Marriott Hotel. This is not a call to put aside critical assessments or put aside being on guard against any possible corruption – any corruption that may rare its head. But rather it is a call to recognise that there is no basis to start off with this assumption that there is corruption and discrimination, and marginalisation. All it does it saps the energy and the enthusiasm from the same people who people say that they are concerned about. We could think again, thinking in the biblical strain, of that parable of the talents, the ones who got five and two and one. The one who got one can feel very bad and put out. Now, we all know the story; he did not do anything with his one and it got taken away from him. So when we dampen people’s enthusiasm and participation in the working and growing of our country we do them great harm.
The Opposition naysayers need to be mature enough to be vocal about their findings, after reviewing the documents presented upon their request, that they must be furnished with the answer that maybe we should put aside, maybe we should be starting for this Tenth Parliament, all those assumptions. Keep on the watch; keep to the look out; but put aside the starting assumption of discrimination and corruption.
Electricity: The provision of electricity to all our households is one area in which the Government has sought to unite and unify our people, providing some access, if not equal access. This has been the aim from since the early 1970s. It was since that time that the Government of the day espoused unification of the electricity systems in Georgetown and Linden with sixty-cycle, the prevailing frequency in America, as the standard. The construction of large hydropower stations was also advocated and the extension of electrification along the coast with the absorption into Guyana Electricity Corporation (GEC) of the day, until then separate independent electricity company in New Amsterdam.
As it happened, those plans and aspirations stalled. They became unstuck by the mid 1970s and even what was achieved deteriorated under our economic reversals and difficulties in the latter half of the 1970s on to the end of the 1980s.We, this Government, began picking up the pieces of a universal electrification programme soon after we came into Government, instituting, first, new generators in 1994, regaining lost ground and advancing as quickly as we could. The provisions in our budget since, and also in this Budget 2012, bring us within five, or so years, of achieving those aspirations of the Guyanese Government of the 1970s. We are, maybe, within five years of achieving those aspirations. I will get to the aspirations just now.
As the Minister of Finance affirmed in paragraph 4.61, under the heading “Physical Infrastructure for Transportation, Energy, Power Generation and Supply”…. In this regard Guyana flagship project is the Amaila Falls Hydropower Project. The Minister went on to describe Amaila Falls Hydropower Project in paragraph 4.63.
We are working towards financial closure and groundbreaking… before the end of this year with commercial operation and delivery of electricity at Sophia during the second half of 2016. The Government always thinking of our people has been bargaining hard to keep the sustainable prices for electrical energy low. Pursuing soft loans from China and the Inter-American Development Bank (IDB) and investing itself in the equity of this project. As currently envisaged, even with the seemingly high totally financed price of US$840 million with cost of energy at Sophia ought not to exceed twelve US cents per kWh, inclusive of the full amortisation of all during the twenty years Build Own Operate Transfer (BOOT) period, leading to much reduced cost thereafter just to meet operations, rehabilitations and maintenance.
The cost of electricity from Amaila Falls Hydropower Project, though greater than our first hope of say nine cents or less, seven cents, even, I recall, is a great improvement on the current cost of prevailing fuel prices, utilising the kind of generators, five to ten megawatt, which are appropriate to our system.
For diesel engines, fuelled by diesel, is thirty US cents generation, and that is pretty standard around the world, and when Heavy Fuel Oil (HFO) is used it is about twenty cents per kWh at current prices, but Amaila Falls Hydropower Project does even more for us. It provides us protection against further rise in the price for petroleum, in particular. It is likely, that some day fossil fuels would be required to carry the cost of removing the carbon dioxide (CO2) and any other greenhouse gases from the atmosphere. We are aware of some articles in the newspapers pointed out that with this one large hydropower station we will have to be thinking of arrangements for prudent backup against emergencies or planned outages and rainfall risk. Yes, that to some extent attenuates the benefits of Amaila Falls Hydropower Project, but it is still an exceedingly good project to do.
We are taking account of Amaila Falls Hydropower Project in all that we do. We need to keep on adding to generation to meet the growing demand for electricity. We have seen that significant sums of money spent in adding recently to two general electrical units, 2 x 7.8 megawatt HFO fuel generator sets and we are in the midst of a programme to upgrade the transmission system. Upgrading the transmission system was envisaged since the late 1980s when three substations were being contemplated. Today, the system has grown and we are putting in seven substations. We note, too, that we have been gradually, progressively, converting the grid from sixty-cycle to fifty-cycle and that includes changing over a station of twenty-two 4 x 5.5 megawatt units, where costs involve, in all of this, capital requirement.
For many years now, through a variety of measures, the Government has been doing all that it could, and perhaps more than it should, to keep electricity charges low. In paragraph 6.4 of his budget presentation, the Hon. Minister has outlined the situation wherein there has been no increase effected in electricity tariffs since December 2007, even though fuel price has increased by forty to sixty per cent. For GPL to partly meet the increase in it fuel bills in 2012, some G$6 billion is being provided from the budget. This would work out to a subsidy of G$8.78 for every kilowatt per hour that consumers consumed. This is money given back to all those who received electricity from GPL and, to be specific, for small domestic consumers whose average is about forty-two kilowatts per month, it is about $370 per month, $3,240 per year. For the larger domestic consumers averaging one hundred and fifty-four kWh per month, it is giving back of about $1,350 per month, and it is much more for the large commercial and industrial consumers.
It is a commonplace to be critical of GPL and to pay it for electricity tariffs which are high. I think I want to comment here, because I was asked to and I said I would, about that headline in Kaieteur News about buying versus renting emergency Caterpillar sets. I have a full considered answer here which GPL will publish that deals with it. Let me give you the short answer. The short answer is that delivery of purchased sets could have been four, six months or later.
When one rents sets, it would be sets that people would have been keeping in stock, standing there in their yards, maybe for years. And naturally, when one pays for rented sets he or she takes right away, one pays for the years, too, that it has been standing there just waiting for one to call for it. So that is a big thing. The second issue is that the rental includes a certain amount of oversight and maintenance, some consumables and spares. And thirdly, it has a guarantee of performance. If the performance falls below a certain amount, the rental is discounted. However, there is a full answer. I think that Kaieteur News and the people who write Kaieteur News – and they were at the Public Utilities Commission hearing – knew better and they indulged in a bit of wickedness. The trouble is that these bits of wickedness are the kinds of things that make people feel that they have a right to steal electricity and that is a big blot on our country. And that is the problem with GPL.
Mdm. Deputy Speaker, we did bring, reluctantly, to the last Parliament, legislation to deal more quickly, more assuredly and more severely with things like theft of electricity and conniving between past and present employees of GPL with the public out there to steal things, big things even, like transformers and so on.
Let me now address the reform which we are implementing in the supply and pricing of electricity in Linden, effective from 1st July, 2012. To place this reform in context, I need to speak about Linden, where it has come from, where it is today and why there should be no more delay in implementing reform. Linden is, today, very proudly – at least we are proud of Linden – Guyana’s second town. Much is riding on Linden; much is expected of Linden in the further growth and development of our country.
Linden, as we know, started life nearly a hundred years ago as Mackenzie, a total company town, a foreign enclave, in many ways, disconnected from the rest of Guyana. Things began to change from about 1965 as Alcan-Demba began passing workers homes and responsibility for same to the workers themselves. Imagine then when one gets the company to repair his or her house, change the roof and all of that and now, one has to take responsibility for that. Linden people did it, they survived and they are better off today.
Linden became more important in our country as the road connecting Georgetown and Mackenzie was opened and there is one more reform left to completely transform Linden into a regular Guyanese town, and that is the merger of electricity provision in Linden into the country’s grid.
As the Minister has asserted, for Guyana as a whole, Linden too is at the most important juncture in its economic history. Linden too is poised for rapid takeoff. We know that the Engineering Procurement and Construction (EPC) contractor for Amaila falls, China Railway Engineering Corporation, having visited and seen Linden, has already determined that all materials to and from the construction site, including the transmission line, will arrive in and depart from Guyana at Linden by boat or barge. And China Railway Engineering Corporation rail and its major sub-contractors have already taken options to lease available space in the old bauxite main office at Linden. Linden and the citizens of Linden stand in the first place; they stand on the first step for local employment, local contracting and other opportunities.
In paragraphs 4.16 to 4.18, under the heading, Transforming the Economy, Modernising the Traditional Sector, in the Budget 2012 Speech, the Minister acknowledged that, “the bauxite industry has served as an important traditional contributor to overall national economic performance”. The Minister outlined, sufficiently for this debate, Bosai’s plan in 2012 to “start construction of a third kiln aimed at expanding RASC production by 150,000 tonnes...and also to produce mullite”. And this will see the creation of five hundred direct jobs during construction.
In Upper Berbice, the Bauxite Company of Guyana Inc. (BCGI) has reached to steadily raise bauxite production to three million tonnes and five million tonnes per year already. A week or two ago I was there when it launched scores of mining equipment valued about US$23 million, and I saw the beginning of the roads into the new mines, Kurubuka, Kokerit and Block 38. Additionally, four hundred and fifty jobs will be created in the Upper Berbice area. And also, Linden overtook Bartica and has become the transit town and the gateway to the Hinterland of Guyana and to Brazil. In this regard, already a number of timber companies passed their products through Linden and a number of them have established facilities in Linden. After careful nurturing over a number of years by Chandling, it is said to replace a start-up wood processing operation at the old green camp site with a large modern processing plant conception in Region 10, just south of the Moblissa River where it enters the Demerara River. That would make available construction and permanent jobs for citizens of Linden.
Linden is included in new and emerging sectors. One of the ten call centres in Guyana is in Linden, the optical cable from Lethem passes through Linden and there is what is called a drop off point provided in Linden. So we are persisting in holding before us and people in Brazil that Guyana would be a good port for Northern Brazil as Northern Brazil develops. We continue to work to improve the Linden/Lethem Road. Linden has a great legacy of being an export and receiving port because in the best days of bauxite, up to about 3 million tonnes a year of bauxite were shipped out of Linden, lots of fuel and other things. So, Linden stands to be the major port, initially. At least for the first ten years, I could see Linden being the major port for Brazil and trade to Brazil. [Member: Northern Brazil.] Yes, Northern Brazil. It is for people in Linden to have the new attitudes to be able to take part importantly in this new situation in our country and in Linden that we pursued the Linden Economic Advancement Programme (LEAP) which was a programme to change minds and attitudes of people, to turn them into entrepreneurs, so that they will be able to see things not only from the side of workers and not to think of themselves only as workers, but to think of themselves as entrepreneurs also.
The merger of Linden into the national grid was proclaimed since the mid 1970s. In 1976, then Prime Minister, L. F. S. Burnham, addressing a rally at Kofe Square in Linden stated, and here I have GUYBAU News of Friday, 23rd July, 1976 - I cannot read as well now as I could have then - Guyana Electricity Corporation to take over Electricity Supply at Linden. Let me read what he said:
“I am not satisfied either that those who are supposed to pay do pay.”
“Let us understand a few things straight. Socialism is not freeness. What we hope to do when we are integrated into the general scheme is to bring you straight under the umbrella of the Guyana Electricity Corporation. I do not know how much it will cost, but you will certainly have to pay no more than the people in the rest of Guyana pay. I do not promise you that you will necessarily get it cheaper than other people because, as Prime Minister, I cannot have favourites. I am Prime Minister of the Co-operative Republic of Guyana, not of the Republic of Linden. Get that straight once and for all.”
Now is a good time for the last effort to be engaged in completing this merger and bringing an end to the unsustainable subsidy of electricity cost in Linden. The provision of electricity to workers’ homes in a company town, as Mackenzie was, at no charge or very highly subsidised charges, was understandable. However, Linden today is no longer a company town. Today, less than 10% of households in the Linden area contain at least one person who is employed by today’s bauxite company and it is a new company, BOSAI, as compared with more than 90% of households in the last days of Demba, first days of the nationalised bauxite company. And we note too that when in the 1980s the bauxite company could not carry those costs, they were transferred and taken up by the Government. And those costs have been growing. So last year, the treasury from taxes and revenues of all the peoples of Guyana gave Guyana $2.576 billion to subsidise electricity in Linden. That was a subsidy of GUY $60.81 per kilowatt hour billed to the community: subsidies of GUY $17,000 per month or $200,000 per year for the average domestic consumer and subsidies of GUY $50,000 per month, $600,000 per year for the average business customer in Linden. I submit that that is no longer tenable. I submit, even more importantly, that Linden cannot proceed to grow or develop on that basis. We have to merge the provision of electricity in Linden into the national grid.
The Government intends to have the following in place by 1st July, 2012, that is for the second half of this year: merge the supply areas of Woska into Linden Electrcity Company Inc. (LECI); align the classification of customers in Linden with that of GPL and adopt the tariff schedule of GPL with the possible amendment I spoke about of trying to give the first band of electricity at almost nothing; calculate the monthly electricity bill in accordance with the GPL tariff; for the rest of this year customers in Linden pay only half of the bill as calculated, only half of the bill as people elsewhere in Guyana would have paid; and, as an old bauxite man, but not enjoying the benefits as old bauxite employees, bauxite pensioners will receive the first 100 kilowatt hours each month at no charge and they will pay, according to the fourth proposal, for anything above consumption of 100 kilowatt hours per month. Let us note that even with the above, this year, we are putting from the Consolidated Fund GUY$1.65 billion to subsidise electricity in Linden. There is no doubt that this is disruptive and traumatic, but I was there in the 1980s when following long time after, maybe Mr. Burnham’s call, prices were raised at the time from $0.02 a kilowatt hour to $0.40 a kilowatt hour. And it was disruptive but we survived. And this would be disruptive, but we will survive and we will prepare ourselves to partake in the growth and development of our country and of the area. Linden could grow. If we do not do this, we will have a set of figures and then we will have to constrain Linden to those figures. Linden would not grow. So we have to take it and we have a good authority. We could not have had a better authority on which to proceed.
In a few minutes, let me say about our Hinterland Electricity Programme. You know of 11,000 photovoltaic (PV) systems which are going into every household in the Hinterland and, as we lay it out here now, we are finding that, as all around Guyana, in the two years or so since the lists were made up in these villages that there is some increase in household buildings from 5% to 10% in all the villages as we go, on an average. That poses as a problem but it is a good problem. It tells us that things are also developing in the Hinterland as we have set out to make them develop.
Also, this solar photovoltaic project will be the base to provide electricity to the One Lap Top Per Family project. We are working and pursuing the development of a mini hydro at Kato and that is important because with the roads around Kato, Paramakatoi, Itabac, Cheong Mouth and those places, we can see a cluster of villages and we could see, maybe, Kato and Paramakatoi being centre of that cluster.
Finally, the Guyana Energy Agency (GEA) which has the charges of monitoring the use of energy in Guyana, promoting energy efficiency, use of renewable energy including waste responsible for hydroelectric act, and also it has been working on the Fuel Marking Programme to contain and constrain the propensity to smuggle fuel. There are lots of margins - it tells me – particularly if you start out with Venezuelan fuel at 10% of the world price, domestic fuel, but it could cause a lot of foreign affairs problems too. We hear of those incidents on the Cuyuni River sometimes. I want to call on our people to pay attention to the programmes of the GEA which the GEA has been carrying out and will continue to carry out to train our people, to change attitudes, so that we live more efficient lives as we use all energy and, in particular, electricity. I can mention programmes for solar cooking. I used to think it was funny to put a pot in a big mirror, but it was demonstrated and also popularising improved wood stoves for the Hinterland. We had the announcement from the Minister that Government will remove applicable taxes on equipment used for generation of electricity from non-traditional or renewable sources for both household and commercial purposes and certain other appliances more efficient for utilising renewable energy sources. That gives further credibility to the Government’s Programme to promote a Low Carbon Development suitable to our circumstances.
So Mdm. Speaker and Hon. Members, let me close in reaffirming that this is indeed a people’s budget, that we have gotten on to a good track and we have been performing reasonably well. I too long for the days when we can get up to 7%, 8% or 10% growth rate and we can, if instead of preaching to people everyday about discrimination, marginalisation and corruption, we join in making people understand that the better life we will have, we will have to create it ourselves, in service to each other, providing goods and services to each other and if we all do that, we will soon have the kind of Guyana that our ancestors have been dreaming about for a long time. Maybe, as we complete the reform in Linden and make it truly no more a company town, as per the call in 1976 of one Linden Forbes Sampson Burnham, as I do it, may I hold myself free to, maybe, make a challenge to head the party that that gentleman once led and headed.
I thank you very much. [Applause]
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