The lack of a reliable supply of electricity in Guyana, especially in Georgetown, was the most severe constraint on economic activity and a major factor in emigration. By 1990 blackouts of sixteen hours per day were common in the capital city, affecting even the presidential mansion. Blackouts occurred without warning and sometimes lasted for several days. Most businesses in Georgetown employed standby generators, raising the demand for imported fuel.
The electricity supply was unreliable because the facilities of the state-owned Guyana Electricity Corporation (GEC) had deteriorated during the 1980s. In 1991 the GEC had a capacity of 253 megawatts of electricity and generated 647 gigawatt-hours of electricity, satisfying about half the estimated demand. The reasons for the shortfall were not only the lack of funds to replace aging generators and to build new power plants, but also periodic fuel shortages because most electrical power was produced thermally. There were other less tangible problems: GEC's finances were inadequate because the cost of electricity was below the cost of production (especially when taking depreciation into account); and the attitude of managers and workers was reportedly very poor. The bauxite and sugar sectors had their own electricity supply system apart from the GEC, but they also suffered power shortages.
Two types of efforts were under way in the early 1990s to rectify the electricity shortage. In the short term, GEC was limping along with the help of a small floating generator made in the United States and two ten-megawatt gas-turbine generators borrowed from Brazil. There was also a possibility that electricity would be bought from neighboring Venezuela.
In the longer term, the government was trying to obtain foreign investment and assistance to rebuild the electrical system. GEC planned to hire a consulting firm to help it develop a least-cost expansion program and to improve the pricing of electrical service. International financial organizations were also expected to contribute funds. As early as 1985, the Inter-American Development Bank (IDB) had approved a US$16 million loan for rehabilitation of GEC, and an agreement was reached with an Italian company to build a US$45 million (thirty-megawatt) power station. Both projects were delayed, as were plans to build a hydroelectric plant on the Mazaruni River. The Economist Intelligence Unit reported that GEC rehabilitation still had not started in mid-1990. In 1990 negotiations were under way with the United States firm, Leucadia, to form a joint-venture company for the operation of the electrical system.
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