Public Utilities Commission Annual Report - 2016 1 CONTENTS Chairman’s Statement 2 Introduction 8 REPORTS Complaints Division 17 Engineering Division 27 Finance Division 32 Telecommunication Sector 38 Public Utilities Commission Annual Report - 2016 1 to wit, Carriage of passengers in motor buses or hire car: Airport and airline services: Carriage of goods for hire or reward by goods vehicle: Lighterage or Cargo handling: Dockage, Wharfage or related cargo services, and Water supply services, except retail deliveries. The Act also provides for the Commission to be a body corporate which shall consist of a Chairman and four other members to be appointed by the Minister from among persons appearing (to the Minister) to be CHAIRMAN’S STATEMENT of high character and integrity and to be qualified as having extensive and relevant professional expertise Justice Prem Persaud (ret’d), CCH in trade, finance, economics, law, accounting engineering or business management or extensive experience in matters relevant to the functions of the Commission. When the Commission was first constituted the I am pleased to present the Commission’s 2016 annual Chairman was appointed for a period of three years, with the other members being appointed on a staggered Report in which I propose to set out facts, which may basis for between one and two years. Any subsequent appointment or re-appointment of the Chairman and be considered interesting for those who have a flair for members shall be for three years. records historical in the Regulatory field. The appointment on a staggered basis was undoubtedly catered for smooth transition of members to allow The Commission is a body corporate established by for continuity, and for a quorum of at least three members inclusive of the Chairman to be always in place. legislation, and performs regulatory, investigatory, enforcement and such other functions conferred on it by The first Chairman appointed was Mr. JOSEPH TYNDALL, A.A., C.C.H: followed by Mr. PAMADATH J. the legislation. This authority was really the requirement MENNON, A.A., then the current Chairman Justice (retd) PREM PERSAUD, C.C.H. Over the years eleven identified in the agreement between the Government Commissioners were appointed (not collectively), but all on a part-time basis. The Chairmen were all full- of Guyana and Atlantic Tele-Network, particulars time appointees. of which appear in this report. The agreement was to establish an independent statutory authority to regulate Members of the Commission are, of course, subject to the provisions of the Act, and in the exercise and the operations of companies or other persons engaged in discharge of their functions, shall not be subject to the direction or control of any person or authority. In the providing telecommunication services operating in this exercise of such functions the Commission shall have the power to initiate and conduct investigation into the country, with a view to securing compliance with the operations and standards of service of any public utility. And the Commission shall also act in an advisory Justice Prem Persaud (ret’d), CCH relevant laws and to protecting the interests of persons capacity of the Minister in such matters concerning public utilities as are referred to it by the Minister. making use of such services, referred to as subscribers. The Authority (Commission) will be empowered to determine questions as to the reasonableness of the rates charged or to be charged by GTT for services Prior to the incorporation of the Guyana Telephone and Telegraph Company (GTT) there was the rendered by it and the decisions of the authority will be binding on GTT. (Articles 6.7: 6.8 of the Agreement Guyana Telecommunication Corporation which was wholly owned by the Government by Order No. 11 dated 18th June, 1990 refer.) of 1967, and continued under the Public Corporations Act 1988 – Act No 21 of 1988. In due course, on June 18, 1990 by an agreement between the Government and Atlantic Tele-network Inc (ATN) of the The Government introduced legislation in terms of the agreement and also took the opportunity to legislate USA, the Government agreed to transfer to ATN and ATN agreed to purchase from the Government for other utilities referred to as the PUBLIC UTILITIES COMMISSION ACT and numbered No. 26 of shares representing eighty percent (80%) of the issued share capital of GTT, a private limited company to 1990. This Act applied, with effect from its commencement, to every public utility engaged in (a) providing be incorporated by the Government and shall take over the business, assets and liabilities of the Guyana any service in the production, generation, storage, transmission, sale, delivery, furnishing or supplying Telecommunication Corporation, a public corporation wholly owned by the Government. The government electricity directly or indirectly to or for the public, (b) the conveyance or transmission of oral, written, eventually sold the remainder 20% of the shares to a Chinese Company. digital or any other form of messages or communications by telephone, wireless telephony, telegraphy, or wireless telegraphy, cable television, telecom service providers, internet and other telecom network service The agreement also provided for the establishment of an Independent Statutory Authority to regulate the providers, radio common carriers or cellular mobile providers or any other method of transmission offered operations of companies or persons engaged in providing telecommunication services and operating in to the public or offered as common carriage in the future: And, in due course, subject to the policy of the Guyana. The GTT was granted a licence to provide or undertake certain services throughout the licensed Government of the day, any other service specified by the Minister by order, being any of the following, area, for example, public telephone, radio telephone (except private radio telephone systems), pay station 2 Public Utilities Commission Annual Report - 2016 Public Utilities Commission Annual Report - 2016 3 telephone services, national and international voice and data transmission (among some defined services), the Government shares of 50% plus one of the issued share capital of the Guyana Power Company (GPL), and the licence shall be an exclusive one for a period of twenty years, which at the option of GTT and a public company which was incorporated by the Government and which took over most of the assets and subject to the provisions of the agreement be renewable on an exclusive basis for a further period of twenty some of the liabilities of the then GEC, a public corporation that was solely owned by the Government. years. (In 2010 GTT did exercise the option and the licence was renewed for a further period of 20 years). GTT is also entitled, in terms of the agreement, in determining the rates to be charged to the subscribers, a The company’s licence tied it to deliverables, the most important of which was a reduction of system minimum rate of return of 15% on capital dedicated to public use. That rate is not guaranteed – it is only an losses, which at that time was approximately 36-38 percent. By the end of 2001, it became apparent to the entitlement - since GTT has obligations to consumers in terms of the agreement. Commission that GPL seemed unable to reduce the losses, which had grown under its watch to 42%. Still on the Telecommunication issue, we had CEL*STAR GUYANA with interests in France, which opened We (The Public Utilities Commission) held a public hearing that afforded GPL the opportunity to explain the its doors in February 2001. This company was granted a licence to operate, but we soon suspected that the reasons for the upsurge in the losses. In its judgment, the utility showed no resolve in achieving the agreed intention was to trade with it. In 2007 the operators transferred their interests to DIGICEL which has been target and we imposed a penalty of $1.368 billion for this infraction. The penalty was based on the formula and is still doing a good service providing for the needs of the consumers. The Company offered competition calculated by the Commission on what would have been the savings in kilowatt-hours to the consumers had to GTT and tends to control the market – their operations are primarily concerned with mobile services. the target been achieved. GPL considered that the fine would have had serious implications in its quest to GTT has the monopoly for the land line and international traffic. All international traffic ought to go borrow funds from financial institutions. ESBI as a result took a decision to sell its shares to Government for through GTT’s infrastructure but various efforts have been in play to by-pass them and offer cheaper rates one dollar and left. Since then the company (GPL) has remained wholly owned by the Government. well below the PUC approved rates. Another licence was granted to a company – CTL –. That Company operated for a short period of time but WATER and SEWERAGE underperformed, and its licence was not renewed. Prior to 2002 consumers were supplied with water and other related services by two separate agencies, namely GEORGETOWN SEWERAGE AND WATER COMMISSION (GS&WC), and the GUYANA ELECTRICITY WATER AUTHORITY (GWA). GWA’s responsibilities were the supply and maintenance of the water in certain rural areas, whereas GW&SC supplied the greater Georgetown areas with water and sewerage Electricity generation in this country had been a patchwork provided by a few entities, and in the early years services. GUYWA was not responsible for the supply of water for the nuclear housing areas attached to the Georgetown was powered by the International Power Company of Canada (IPC). Alcan and Reynolds of sugar estates since the SUGAR INDUSTRY LABOUR WELFARE FUND COMMITTEE (SILWFC) was Canada (Bauxite industry companies) provided power in the upper Berbice area and New Amsterdam and the agency charged with the responsibility for the supply and maintenance of water in those areas.