Guyana’s Gas to Energy project will be a gamechanger for the new oil producer. But on its own, this mega project will not be enough to eliminate blackouts. International Economist, Dr. Justin Ram said it should be paired with an upgrade to the country’s grid if this project is going to support Guyana’s transformation in the way the government wants it to.
In a study titled ‘Gas to Power & Implications for Economic Diversification in Guyana’, the former Chief Economist for the Caribbean Development Bank (CDB) recommended an adequate grid infrastructure policy, and legislative changes to ensure that all Guyanese benefit from the landmark project.
“I think an upgrade of the grid is going to be a lot easier now because now the economy is going to be booming,” he told OilNOW during a recent webinar.
“There is nothing like significant economic growth to derisk any project… Banks that would be hesitant to lend when you have a very low growth rate, all of a sudden, they are willing to lend because they realise that more than likely even if they are about to lose on some of those loans, the majority of the loans will come through and so, in a situation like this, I would say that there are significant opportunities to upgrade the grid,” he said.
The economist said government should pursue this upgrade under a public-private partnership (PPP), so that it can stave off some of the financial risk.
With blackouts still frequent in this small south American nation, the need for a grid upgrade is even more evident as the demand for reliable energy grows. Dr. Ram said Guyana “has the most amount of power outages in the Caribbean, around 8 per month, compared to the lowest in the Caribbean of 2 per month.”
He also said that these blackouts are of the longest average duration, 3.4 hours, when compared to 1.8 hours in Jamaica, with the lowest duration. Because of these power outages, it is estimated, according to Dr. Ram, that businesses lose 1.6% of sales compared to, for example, 0.3% in Suriname.
“So, this high cost of unreliability is a real hindrance to private sector led growth and investment,” he said.
Last year, Vice President Dr. Bharrat Jagdeo said a study is underway which will inform improvement works on the grid.
“That’s the next big thing we’re working on, a stable smart grid… where fiber will be on all the electricity lines, that you can sit in a control room and know without having to send a crew out and get a report when there is a power outage, any part of this country,” he had said.
The plan to develop a ‘Smart Grid’ is also outlined in the government’s Low Carbon Development Strategy (LCDS).