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DRAFT March 11, 1996

I. Basic Features of the Infrastructure Sectors

II. Policies of the Sectors

III. Summary of the Principal Issues and Constraints Facing the Sectors
A. Road Transport
B. Maritime Transport
C. Air Transport
D. Electricity
E. Sea Defences: Issues and Constraints
F. Drainage and Irrigation
G. Hydrometeorological Service: Issues and Constraints

IV. Sectoral Objectives
A. Transport
B. Energy
C. Sea Defences
D. Drainage and Irrigation
E. Hydrometeorological Service

V. Policies for Achieving Stated Objectives
A. Road Transport
B. Maritime Transport
C. Air Transport
D. Energy
E. Sea Defences
F. Drainage and Irrigation
G. Hydrometeorological Service

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I. Basic Features of the Infrastructure Sectors

The infrastructure sectors are basic to the functioning of any economy and even more so for Guyana, with its far-flung patterns of settlement, which place special demands on the transport system, and the low-lying nature of coastal lands, which require an extensive system of sea defences and drainage works. The export orientation of the economy adds an additional, international dimension to the requirements for transport.

The demands of a growing, modernising economy imply that a rapid expansion of capacity and improvements in efficiency are needed in the basic areas of electricity generation and transmission, all modes of transport, water supply and drainage and, in the case of Guyana, sea defences. If this need is not satisfied, then the infrastructure sectors detract from the economy's ability to grow and to compete on world markets.

Guyana has experienced increasing bottlenecks in the infrastructure sectors over the past two decades. To cite some prominent examples: i) an inadequate electricity system raises costs of production in all sectors, by requiring producers to install their own generating capacity and by damaging equipment because of severe voltage fluctuations; ii) lack of a deep water harbour increases international transport costs (for example, it decreases the returns received by rice producers by about US$35/mt); iii) inadequate maintenance of drainage works keeps some agricultural land out of production and reduces yields on other lands; iv) lack of an all-weather road to the southern parts of the country limits the possibilities for economic development in that area and holds back the potential for developing entrepot trade from neighbouring regions of Brazil; v) lack of reliable water systems for potable water creates a health hazard for Guyana's population; vii) deteriorated navigational facilities at airports.

Guyana currently has only 152 km of paved roads that are in good condition, and an insufficiency of bridges across major rivers. In the aviation sector, both internal and external flights are inadequate in frequency. Besides a deep water harbour, port handling systems need to be improved in efficiency. The situation of the electricity sector can be summarized by pointing out that the amount of electricity generated in 1993 was less than in 1969, and the frequency of power outages has reached almost intolerable levels.

In view of these circumstances, this Strategy proposes comprehensive and forward-looking measures to rehabilitate the country's infrastructure and place its future expansion and maintenance on as self-sustaining a basis as possible.

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II. Policies of the Sectors

The past policies of the infrastructure sectors are described in Chapters 38 to 40. For the purposes at hand those policies can be summarized as containing the following elements that led to the present situation:

a) Rates that were too low to fund continuing maintenance requirements.

b) Reliance on the Central Government for funding for capacity expansion as well as maintenance, at a time when the Government's fiscal capacity was being steadily reduced.

c) Government ownership and control of management decisions and operations.

d) Lack of participation of users in decisions on maintenance. This particularly undermined the effectiveness of the drainage and irrigation systems.

e) Some regulations that reinforced Government monopolies and held back private sector participation in providing infrastructure services. Examples include the limitation on the number of commercial airline seats on domestic routes and, until recently, the lack of provision for the public electricity corporation to purchase privately-generated power.

It should be noted that in some cases the implicit subsidies conferred by the low rates were not targeted on the poor, but were rather extended to the general population of users. A common example has been the fees charged for rides on government-owned ferries.

Recently several of these policy orientations have changed. Cost recovery is being emphasised for public services and private companies are being encouraged to provide those services as well. The policy packages set out in this Strategy for the infrastructure sectors follow these new orientations and respond to a vision of how Guyana's economy could be conformed in the early years of the 21st century (see Chapter 3).

The encouragement of private investments in and operation of infrastructure is being extended to major undertakings such as harbours, bridges, power plants and road segments, through the mechanism of offering long-term concessions.

Spatial priorities are being established in the form of completion of an all-weather road to Lethem, which is absolutely essential to unify the nation, and to develop a deep water harbour that is readily accessible to that road. Other hinterland access roads will be attended to as well, and the current project of upgrading airport facilities will be brought to completion, to strengthen Guyana's internal economic linkages and those with the rest of the world.

Rates are being increased for water, electricity and drainage and irrigation. While external funding is being used to rehabilitate the badly deteriorated system of sea defences, cost recovery mechanisms have been designed and will be in place to ensure that long-run maintenance needs are met, thus avoiding a repeat of the deterioration of the sea walls that prompted the need for external assistance.

These steps and additional reforms that follow in their path are outlined more specifically in section V of this Chapter and in Chapters 38-40.

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III. Summary of the Principal Issues and Constraints Facing the Sectors

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A. Road Transport

1. Issues

Some major issues in the road transportation subsector are:

2. Constraints

Currently, the principal constraints to dealing with these issues are:

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B. Maritime Transport

1. Issues

The following are some issues that influence the scope and quality of the operations in the maritime transport subsector.

2. Constraints

Many internal and external constraints influence the general performance of the maritime transport sector. Some of these constraints are:

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C. Air Transport

1. Issues

One of the most significant characteristics of the air transport sector is the marked absence of up-to-date civil aviation legislation. This, among other issues, determines the role and scope of the sector to realise its potential in the national development effort. More specifically, the issues facing the air transport sector are outlined below:

2. Constraints

Principal constraints in the air transport sector are:

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D. Electricity

1. Issues

Overall, energy demand can be expected to grow considerably more rapidly than real GDP, in part because manufacturing and private services will expand faster than GDP, and in part because of the need to make up the past deficit, i.e., to allow existing enterprises to convert from their own generators to the grid supply. Accordingly, the estimates made in 1994(1) are revised upward, and total effective demand for electricity is expected to grow by 8 percent per year from 1996 through 2000, and by 7 percent per year from 2001 to 2005.

It needs to be stressed that the lack of a reliable supply of electric power has been holding back the development of our economy. Power costs are unduly high because many industries are forced to generate their own electricity, and potential investors are discouraged by the situation. In addition, small enterprises, potentially the most important source of new employment, are discouraged from starting up because of the high cost of generating their own power. Furthermore, the deficiencies in electricity supply have a direct impact on the residential sector. Solution of these problems has an important institutional dimension, as discussed below.

2. Constraints

a. Financial constraints

Energy supply systems --electricity generation, transmission and distribution, oil and gas wells and pipelines, coal mines, energy forests, petroleum distribution facilities-- usually require large capital investments. Governments in countries like Guyana, where foreign exchange and other resources are often available in inadequate quantities, face tremendous difficulties with energy development and development in general, and making acceptable arrangements for financing becomes a major economic and political task.

In Guyana, the Government faces an additional financial burden, in that the public power utility has found it difficult, for various reasons, to achieve financial sustainability. Huge transfers from Central Government have propped up the organisation, and nonpayment for as important an input as fuel, imported under special arrangements with Venezuela, amounts to a virtual subsidy. All this, in turn, inhibits the utility's ability to self-finance the required new investments.

b. Technological constraints

Guyana has very little technological capability in energy supply systems. Our manufacturing sector has demonstrated some capability in production and development of energy supply equipment. One firm for example, has manufactured a mini-hydropower turbine. Another company is producing solar water heaters. Programmes to develop and disseminate biogas and solar drying technologies have had some degree of success. However, as to equipment required for large scale energy supply systems, the country has neither the productive capacity nor the technological know-how.

One additional issue facing the sector from a technological point of view, is the cost competitiveness of some technologies for using some of our domestic energy resources. Many ideas for utilising renewable energy sources like solar and wind power are appealing, but the costs are high. However, it seems to be the view of many experts that wind energy applications can prove cost-effective, and researchers are confident that in the future the cost of solar power generation could be brought down considerably.

c. Institutional constraints

For national energy planning and management to be done properly and executed effectively, he necessary institutional capability must be in existence. This sounds obvious, but it is all too often taken for granted, and therefore must be outlined explicitly.

By the same token, Government has not proven to be a capable operational manager of an electricity company, and new institutional requirements are needed in that area.

d. Environmental constraints

The imperative of avoiding unnecessary environmental degradation as the development process takes place, has become a major issue for governments and people worldwide. It is recognised that many of the more developed countries in the world have achieved that status by exploiting resources in a reckless and unsustainable manner. Current generations have a responsibility to utilise resources in ways that take into consideration the needs of future generations. It is essential, therefore, to take into account the potential environmental effects of energy projects. Environmental legislation soon to be put in place will make this legally necessary.

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E. Sea Defences: Issues and Constraints

1. Procurement

The interval between the identification of critical areas and the commencement of physical works has been too long. The movement of mega mudbanks along the shoreline may result in dramatic changes at any location that require a quick response. Examples of these include the high rate of accretion in the Hope/Clonbrook area over the past few years that will result in a large increase of excavation quantities under the IDA contract. Any contract sum greater than G$6 million must go through the Central Board. This could be time consuming and lead to delay in project execution.

In the case of donor-funded projects, it takes about two years to commence the execution of physical works from the signing of the agreement.

2. Institutional Arrangement

The Sea and River Defence Board has the legal responsibility for all declared sea and river defences. The Hydraulic Division is the executing agency for the Board and comes under the Ministry of Agriculture. As such, it shares the institutional problems common to all ministries. To overcome these limitations, the Project Execution Unit was formed in 1994 to manage the donor agencies-funded programme and train counterpart staff. It has no formal legal mandate but was given some autonomy in accounting and procurement. A longer-run concern is that the Project Execution Unit was envisaged as a temporary unit, and after the donor-supported rehabilitation of sea defences is completed, there will be a need for an effective, permanent agency to manage maintenance tasks and ensure that maintenance works are not neglected again.

3. Cost Recovery

New policies are needed to ensure adequate funding for maintenance of sea walls on a continuing basis. The lack of such funding in the past has led to severe deterioration of the structures and therefore the current need to recourse to external sources of funding for major rehabilitation. Dependence on annual allocations from the general budget of the Government is evidently not an adequate solution.

4. Contractual Arrangements

Because of the stringent preconditions of the donor agencies, local and regional contractors find it difficult to pre-qualify for some sea defence projects. The contractual arrangements should be examined to suit local conditions and encourage the acquisition of relevant skills by local contractors.

5. Financing

The Government of Guyana has received funding of approximately US$40 million from four donor agencies for the rehabilitation of approximately 26 kilometers of sea defences, but it continues to undertake emergency sea defence and maintenance works to the value of over US$2 million annually from its own resources.

6. Accountability

The Project Execution Unit is self-accounting right now and auditing is being done at the Auditor General's Office. Expenditures are recorded under two headings: "local expenditure" and "specific expenditure." The Hydraulics Department accounting is managed through the Ministry of Agriculture using the traditional public service accounting procedure. Eventually, one system should be applied in both cases.

7. Planning Horizons

Besides carrying out the donor-funded rehabilitation work, laying the institutional and technical bases for a programme that continues indefinitely into the future is important now. For this purpose the responsibilities can be defined according to length of planning horizon:

(1) Short term (5 years)

The short term plan would involve the rehabilitation of the critical coastal protection structures identified under the donor agencies programme, the maintenance of the existing infrastructure and the rehabilitation of emergency works that are currently being funded by the Government of Guyana.

(2) Medium term (510 years)

The medium term programme would be the rehabilitation of further lengths of sea defences and the establishment of maintenance and a shorezone management unit.

(3) Long term (15 years)

Carry out data collection and monitoring programmes to determine critical areas along the sea defences for rehabilitation and continued maintenance.

8. Protection of Mangroves

There are two principal reasons why the sea defences are in such deteriorated state today: lack of performance of regular maintenance duties over the years, and failure to protect the mangrove areas that once were very prevalent along the coast. These causes were also singled out by Baron Siccama more than a hundred years ago. It is urgent to protect the remaining mangrove zones and to carry out a gradual programme of reforestation of other areas in mangroves. This will be important for sustaining marine fisheries as well as the sea walls.

9. Data Collection

Sea defence data need to be upgraded and a monitoring programme established. Immediate requirements are hydrographic surveys and wave measurements. Aerial photography to help in the determination of land use pattern, mangrove extent and sea defence locations should be carried out and then repeated regularly to monitor changes. A programme for monitoring erosion and accretion should be put in place.

10. Costs

The costs of sea defence construction using rocks will be $375,000 or US$2,250 per metre or US$2.25 million per kilometre. Guyana can ill afford to continue sea defence construction at this cost and methods to reduce the financial requirements should be investigated.

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F. Drainage and Irrigation

1. Issues

a. Legislation

Many pieces of legislation govern the management and operation of D&I management in Guyana, but together they do not comprise a consistent body of legal regulations.

b. Multitude of institutions with divided administration

There are eight different agencies with a role to play in the management and operation of Guyana's drainage and irrigation system. The institutional framework is characterised by lack of clear policy objectives, inadequate supervision and coordination, multiple overlapping jurisdictions, significant variations among regions in organisation and effectiveness, and imprecise roles of the various agencies. In particular, there is a lack of coordination between the management of the sea defences and the management of D&I. Also, responsibilities are sometimes shared among central agencies, RDCs, and local authorities. At the same time, little consideration has been given to the role of D&I in the context of the country's entire hydraulic system, and its impact on the water balance of the country.

c. Non-participation of farmers within the system

The present system allows for minimal involvement of farmers, although they are the beneficiaries of the D&I system. Thus the group that has the greatest incentive to be involved in developing an efficient system is excluded from it. When farmers do not perceive any control over how the rates are spent, they are far mor reluctant to pay.

d. Financing

The key to the deterioration of the infrastructure is the failure to secure financing for maintenance. The financing of maintenance depends on the collection of drainage and irrigation rates, with the added complication of conservancy and land development scheme rates. Rate collection is currently only about 30 percent. There is insufficient enforcement of payment regulations, and yet farmers are unwilling to pay for the poor quality of services currently being provided by public agencies. On the other hand, the main reason for the poor services is the severe financial constraints experienced by these public agencies. Lack of land tenure security and weaknesses in the judicial system complicate the possibilities of rate collection.

2. Constraints

a. Technical capacity

The sector suffers from a major shortage of trained personnel. The fundamental reason for this is the low wages offered by the public sector in comparison with the private sector, which makes it difficult to hold onto the most capable staff.

b. Resource availability

Shortage of public funds has led to a severe shortage of equipment for the adequate operation of Government institutions involved with drainage and irrigation, including lack of transport.

c. Inadequate mapping

As stated by Stringfellow, each D&I area is represented in detail on drawings held at Hydraulics Division in Georgetown. However, these are not available in the Regions. The drawings themselves are old and often do not show all vested works or residential areas. More seriously, works under the responsibility of the local authorities are not mapped which represents a major drawback in assessing what the scope of rehabilitation works in the D&I areas should be.

d. Operations of the Conservancy Boards

Again, as pointed out by Stringfellow, these are required to operate the head regulators on the conservancies but in practise little control is exercised and water users have a lot of freedom to interfere with gates. This is a serious problem as assessment of water availability, not water needs, should determine irrigation flow. In fact, the necessary information on the water potential of the conservancies relies heavily, financially and technically, on the sugar estates. Consequently, the interest of one group of water users, the sugar growers, tends to guide decisions about water use. Ideally, a body that is independent of the water users should undertake distribution of water. However, without the support of the sugar estates, it is likely that the system would have collapsed totally.

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G. Hydrometeorological Service: Issues and Constraints

1. Maintenance and Operation

The National Meteorological and Hydrological Station Network has been affected over the past two decades by the lack of spare parts and the rapid loss of skilled staff. This resulted in the closure of several important stations in the approved World Meteorological Organisation Network design and the consequential loss of data. Also, most stations are in remote hinterland areas accessed only by aircraft and other expensive means of transportation.

2. Cost Recovery

Approval has been given to institute a system of charges for data supplied by the Hydrometeorological Service. It is a service-oriented organisation and forecasts have been generally issued free of cost to the media and the Ministry of Agriculture. However, charges are usually applied to specialised data requests thus contributing to offset partially the expenditures for these special investigations and field analyses. Overall, cost recovery has been very low.

3. Financing

The Service has been receiving funds to cover recurrent operating expenditures directly from the Ministry of Finance, during the last three years. The nominal capital funds from the public sector investment programme have been used mainly to improve working conditions, purchase much needed automated equipment and other items to maintain the basic operational status of existing networking stations. Nevertheless, additional funding is needed, especially to reopen the stations that were obliged to close.

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IV. Sectoral Objectives

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A. Transport

The principal sectoral objectives could be summarized as follows:

1. Road Transport

Some important subsectoral objectives include the following:

2. Maritime Transport

The strategic objectives for the maritime transport sector are as follows:

The following are more specific or operational objectives:

3. Air Transport

Under this Strategy, the general objectives of the air transport policy are:

The operational objectives of the national development strategy for the air transport subsector should include:

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B. Energy

The electricity sector plays a strategic role in the development of the economy. If Guyana is to realise its very considerable development potential, a reliable system of electricity generation and transmission is essential. The costs and inconveniences of self-supply of electricity are high enough that they are effectively prohibitive for smaller enterprises and, of course, they are out of the question for most householders. In any case, a modern economy cannot be built on the basis of individual electricity generators. A properly functioning system with adequate capacity is needed.

Accordingly, the principal policy objectives for the energy sector are the following:

1. The main policy objective of the Strategy with respect to the energy sector is to assure that an adequate and dependable supply of electricity is available for the country's future economic development. This includes improving both the quantity and the of the electricity supply. The latter refers to reducing the frequency and magnitude of voltage fluctuations, as well a the frequency of outages. It should be noted that achieving this objective will require substantial capital outlays and also improvements in the management of GEC.

2. A subsidiary but important objective is eliminating the need for Government fiscal transfers.

3. To reduce the dependency on imported petroleum products, where feasible.

4. To provide increased utilisation of new and renewable domestic energy resources.

5. To ensure that energy is used in an environmentally sound and sustainable manner.

6. To encourage, through public awareness programmes, energy conservation practices.

For the implementation of programmes that lead to fulfillment of these sectoral objectives, it is essential to spell out the essential supporting objectives of an institutional nature. This step is all the more urgent because for many years now the existing institutional structure of GEC has shown itself unable to satisfy the objectives given above, especially the first two. Basically, the reasons are two-fold:

a) Lack of sufficient management autonomy to be able to make fundamental decisions on purely technical and financial grounds regarding capital expenditures, current expenditures, staffing and salaries, tariff schedules and other critical topics.

b) Lack of sufficient financial resources to properly maintain and improve the system.

Therefore, the principal institutional objectives for the GEC in the context of the National Development Strategy are to overcome these constraints, that is, to provide it with sufficient management autonomy and to create an institutional framework that is conducive to the obtention of the requisite levels of funding, without recourse to the Central Government's budget. An additional objective is to ensure that the institutional character of GEC incorporates adequate participation on the part of the Guyanese public, given that the electricity sector affects all sectors of the economy and directly contributes to household living standards.

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C. Sea Defences

1. Short Term Objective

The main short term objective is the rehabilitation of the existing infrastructure of sea defences. To achieve this objective, the external donor agencies are funding several programmes at an approximate cost of G$1,500 million annually (1995 prices).

The Italian contractors PAC/GELFI are currently rehabilitating sea defence works on the West Coast of Demerara, under the LOME IV Project. The present strategy is to combine the funds from the remaining donor programmes (IDA, IDB and CDB) to execute sea defence works East of the Demerara River, West Coast Berbice and Corentyne Coast.

In addition, the release of further EEC and IDB funds under the second protocol will permit the rehabilitation of the remaining sections of sea defences West of the Demerara river and along the Essequibo coast.

Funding would be sought from the Central Government for emergency works of approximately 800 metres at La Belle Alliance/Richmond on the Essequibo coast. It is envisaged that the Shorezone Management Programme would be further revised to reflect funding of more physical works along the Essequibo coast.

Central Government is currently funding the emergency rehabilitation programme. The areas identified for this activity are as follows: Mon Repos, Strathspey East, Strathspey West, Buxton.

2. Medium to Long Term Objectives

The medium term plan objective is to achieve the continuing tool of a comprehensive maintenance and replacement programme for sea and river defences. It is envisaged that the cost of this programme would be approximately G$1000 million annually, being gradually reduced to G$500 annually as rehabilitation improves the quality of the sea defences. The Central Government and donor agencies would finance it. Partial cost recovery should be implemented at the beginning of the programme and full cost recovery after emergency works have been completed.

A maintenance programme for the sea defences will include the following:

a. Regular inspection and monitoring and data collection of environmental conditions and structural response.

b. Repair or replacement of components of a structure whose life is estimated to be less than the overall structure life.

c. Emergency repairs to breached areas.

d. Identification of quantities and costs for plant, labour, and materials to undertake the necessary works.

e. Expansion of the foreshore coverage of mangrove and courida.

f. Improved institutional structures to carry out this programme.

g. Permanent financing mechanisms at a level that is adequate considering the maintenance requirements.

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D. Drainage and Irrigation

The primary objective of the drainage and irrigation policies is to contribute to the national goal of rapid and equitable economic growth by facilitating increased agricultural production. To achieve this primary objective, two long-term objectives have been identified, which in turn are broken down into shorter-term objectives.

1. Long-term Objectives

a. To develop a system for the operation and maintenance of the drainage and irrigation system that is environmentally, fiscally, and institutionally sustainable. The following objectives need to be met to fulfill this goal:

(i) Develop an appropriate institutional framework for drainage and irrigation management through:

(a) Increasing farmer participation.

(b) Developing clear roles and responsibilities for public institutions.

(c) Incorporating D&I into broader water management framework.

(d) Improving procurement/contractual procedures.

(e) Developing a system for collecting and accessing relevant information.

(ii) Develop a system that secures adequate and consistent financing for the operation and maintenance of all drainage and irrigation works by:

(a) Defining clear responsibilities for financing.

(b) Rationalising rate setting and collection.

(c) Improving the enforcement of rate payment.

(d) Developing new institutional structures for managing expenditure of the rates collected.

(iii) Devise arrangements for monitoring the environmental impact of drainage and irrigation work (including levels of toxins within the system).

(iv) Draft and enact new legislation to improve and unify current laws pertaining to drainage and irrigation management, to bring them into consistency with the policy framework established in this National Development Strategy.

b. To increase the current capacity of the drainage and irrigation system by improving existing infrastructure and expanding into new lands.

(i) Identify the areas where and expansion of D&I might offer potentially high agricultural returns and carry out the necessary works.

(ii) Rehabilitate and improve existing drainage and irrigation works.

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E. Hydrometeorological Service

The Hydrometeorological Service's main goals are: 1) to be the focal point for the collection, maintenance and operation of the meteorological and hydrological data collection network, 2) to provide improved services to users such as airports, the Sea and River Defences Board, agricultural organisations, etc. The first goal will be achieved following the World Meteorological Organisation guidelines and technical regulations. A development programme will be instituted as directed by the controlling agencies and the World Meteorological Organisation. Also, possible venues for expansion will be identified and their implementation will be subjected to available resources and manpower.

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V. Policies for Achieving Stated Objectives

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A. Road Transport

1. Cost Recovery

Funds for road maintenance are currently derived from general revenue obtained under PSIP allocation and foreign donors loans or grants. The formulation of an appropriate schedule of user charges for road users is another means by which revenues could be generated by the RAD to replace or supplement transfers from the Central Government for road maintenance.

An annual road maintenance budget should be prepared in which the roadways that should be maintained are identified and priorized. The funds for maintenance must be provided from this budget. A separate road maintenance fund must be established, with decision power on its allocations vested in a board that includes representatives of the Ministry of Finance, the Ministry of Public Works, Communications and Regional Development, regional governments, local governments, and the Private Sector Commission.

A five-year road maintenance programme to be initiated in 1996 has an annual cost of G$703M (including 10 percent contingency cost) for each year of the programme life.

Some feasible options are the collection of tolls, sales of stickers, a higher fuel tax, higher purchase tax on vehicles and compulsory loan by new vehicle owners. To realise adequate funds for roads maintenance, vehicle licences have been updated in the 1996 budget. This will allow for the various categories of vehicle owners to pay more realistic charges that approximate to the economic rate for the provision of road maintenance service. However, it is advisable to update these fees on a periodic basis so that they achieve the longer term targets described in Chapter 38.

The proposed longer term targets for fee levels are equitable in that they share the cost of contributing to the road maintenance fund proportionally, since the ownership of vehicles by category is a reasonable proxy of ability to pay. Additionally, this programme calls for the use of the existing bureaucratic structure to collect the increased licence fees. There will be no need to establish a new institutional structure to garner this tax, thus avoiding additional administrative costs.

It is projected that for the periods 1996-2000 the number of vehicles will increase annually by 5 percent. Even taking into account inflation, increases in vehicle population will correspondingly increase the total revenue derived from licence fees.

Initially, however, because of the weak institutional status of RAD, it will be preferable for the Ministry of Finance to continue providing an agency service for RAD, while better cost recovery mechanisms are set up. As the capability of RAD is strengthened, it should eventually undertake its own revenue collection and transfer those revenues to the road maintenance fund.

2. Expansion of Infrastructure

a. Plans will be developed for a new bridge across the Demerara River, also to be carried out through concessioning. The Demerara Harbour Bridge has been rehabilitated with funding from EEC. This work will extend the life of the bridge for up to another 15 years. It is projected that the current level of operation and maintenance costs will be reduced as a result of the rehabilitation. Also, it will make an increase in the marine traffic toll more palatable. This increase had been recommended in 1974 by the Central Transport Planning Unit. Nevertheless, it is urgent to initiate work on plans for a permanent structure, so that construction can begin on it by early 1998 at latest. When it is finished, the existing bridge can provide an outlet for excess traffic in peak periods. The only practicable way to carry out the construction of the new bridge is by concessioning both the building of it and its operation.

b. A new bridge over the Berbice River will be built. International concessional finance is being sought for this purpose, but in the event it proves not to be available, the bridge will be built by concessioning its construction and operation.

c. There is an urgent need to construct a road passing through the hinterland to link Lethem with Georgetown. Long and short term advantages of this road from an economic, strategic and security viewpoint are obvious. A distance of 210 kilometers (between Lethem and Kurupukari) has been completed at a cost of US$16 million, and 136 kilometers are still pending completion. The remaining link of this road will be built as a toll road. The private sector will construct and operate it under an arrangement that allows recovery of costs and reasonable profits.

d. All road-related projects should conform to the findings of environment impact assessments.

3. Human Resources Development

There is a critical shortage of skilled staff to discharge the functions and responsibilities of the RAD. Recruitment and training of the required staff are options. In addition, as a transitional measure, expatriate staff will be recruited to help man the operation of the RAD. However, it should be a short term policy.

It will be preferable to address the several problems that affect negatively in recruiting and retaining capable and competent staff. Among the major questions that have to be addressed are the following:

(1) attractive remuneration;

(2) adequate incentive and fringe benefits package;

(3) training and upgrading skills of staff.

4. Regulatory Framework

a. Institutional Coordination

Although the RAD has the responsibility for road maintenance and rehabilitation, removing squatters from road reserves and enforcing weight restriction on heavy duty vehicles, it is unable to discharge this mandate due to institutional incapacity. One way to overcome this disadvantage is to work closely with other institutions that can render assistance to the RAD. On the coastland it could work closely with RDC, non-governmental organisations, and the Guyana Police Force. In the interior and hinterland areas, it could work with the GGMC, GFC, PFA, GGDMA, and Amerindian councils to achieve the same objectives. Collaborating with other institutions should be a policy consideration for the RAD in its current and future road planning and development programmes.

b. Enforcement

Weight controls will be enforced on all roads, along with increased frequency of inspection for weight and for observance of safety regulations. Penalties will be increased for unsafe operations of minibuses, violations of weight controls, and encroachment on road reserves.

5. Public Transport

a. Setting Fare Structures

It is acknowledged that market forces could set reasonable price and fare structure that is fair to consumers, passengers, and operators. However, a strong regulatory body should safeguard the public interest. The CTPU/RAD should lead consultations with interest groups to set the fares and review them at regular intervals. The interest of passengers and operators of public transport could begin to look to the regulatory body as an impartial arbiter in the setting of fare structure.

b. Service and Safety

Guyana can ill afford the wanton loss of lives on our roads resulting from minibus accidents. Safety measures are definitely required to lower the accident rate. There is also room for improvement as regard the service provided, including as regards to overcrowding. Fines for violation of transport safety regulations will be increased and random inspections of operating minibuses will be carried out with greater frequency.

6. Investment Strategies

To date, investment in the road subsector has been largely left to the government. The magnitude of the investment needed in the road transport subsector is overwhelming. Due to limited resources, the Government is unable to undertake any massive investment. There is scope for private investment in other modes of transport, namely in railways and bridges, and to a limited extent in road transport also. Private sector investment should be encouraged to supplement the Government's effort through concessioning the construction and operation of new transport infrastructure, with participation of both domestic and foreign investors. The arrangements should allow for private investors to build and operate infrastructure facilities, to recoup their investment and make reasonable profits. Allowing such a policy to prevail will materialise in more roads and allied transport networks, thus relieving the communication bottlenecks considerably.

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B. Maritime Transport

This is a particularly sensitive sector because of two main reasons: (1) the importance of our main sea ports to the economic development of the country (because virtually all our exports and imports are transported by sea), and (2) the need for water transport service to some critical interior regions of the country.

Serious emphasis should be placed on the formulation and development of a maritime transport policy. The absence of such a policy can seriously impede development and set the stage for serious hardships at a personal level as well as at the level of society. This must, therefore, be viewed in the context that river and coastal transport contribute to economic growth and national prosperity through their services to industry, commerce and agriculture.

The following are a few aspects of a maritime transport policy:

1. Institutional and Administrative Framework

a. After it has been restructured, the Transport and Harbours Department could remain as an operational entity under the National Port Authority (NPA). However, this may be a bit counter productive for it does not only deviate from recommendations made by previous consultants, for the ferry services to be self-financing, but it would make the NPA too cumbersome to manage.

b. Another policy alternative is for the Government to maintain control of the regulatory, coordinating, and facilitating functions, plus the operational functions of the National Port Authority.

c. The preferred option, as discussed below, is to privatise the ferry services and merge the other functions of the Transport and Harbours Department into the National Port Authority.

2. Human Resources Development

The establishment of a National Maritime Academy to train seafarers, i.e., both deck officers and engineers, would be a most useful initiative. However, for the success of this venture, there would be initial need for technical assistance, that may be sought through the International Maritime Organisation.

3. Ferry Services

Only two ferry services consistently show profits: the Rosignol-New Amsterdam and the Parika-Adventure. For the remainder, in particular for the Berbice River service and the North West service, the Government has provided a cross-subsidy funded out of the profits realised by the Harbours Branch of the T&HD.

Ferry operations have the potential to be profitable. However, capital investment to improve its physical assets is badly needed. The Harbours branch of the Department has always shown a profit.

With the anticipated establishment of a National Sea Port Authority the ferry operations must be privatised. While some increases in rates may accompany privatisation, the quality and capacity of the service can be expected to improve. Ultimately, key ferry links will be replaced with bridges, starting with Rosignol - New Amsterdam. This policy on ferry services will enable profits deriving from the operations of the Harbours Branch to be invested in needed capital improvements.

4. Deep Water Port

At this juncture in time, three factors warrant a reconsideration and updating of the proposals mooted twenty years ago for a deep water port:

(1) The prospect of completing the road link to Lethem, which will promote increased trade with much of Guyana's hinterland, especially the Rupununi, and in addition will offer the possibility of a substantial flow of entrepot trade with Brazil's northern savannah region, provided that Guyana can develop the appropriate kinds of capacity for freight handling and transshipment.

(2) The decision to create an export processing zone, the fiscal framework for which has been included in the Government's 1996 budget.

(3) The rapid growth of the economy experienced since 1991, which has been concentrated in sectors that export bulk goods, such as rice, sugar and new kinds of wood products.

These factors undoubtedly alter the previous calculus regarding the economic feasibility of a deep water port. In the detailed planning for such a port, it is important to take a forward-looking view and account for potential new sources of international trade volume. Already, both the sugar and rice sector have stated on various occasions that they would benefit economically from the opportunity to export in larger ships, and that in some instances this could open new markets for them.

For these reasons, in the transport sector one of the fundamental thrusts of this National Development Strategy is to create a deep water port. It will be a key to the continued growth of Guyana's economy. It is planned to raise the necessary capital funding by concessioning the construction and operation of the port facility. The facility will be designed to handle Panama vessels of up to 60,000 dwt and will be supplied with modern container facilities.

Over the years, two alternative sites have been considered for a deep water port: Lanaballi on the Essequibo River, and the Berbice River. Each site has advantages and disadvantages. Lanaballi offers land, easy access to the future export processing zones, and close links to the road to Lethem. On the other hand, the shifting sand bars downstream in the Essequibo would have to be dredged frequently. Equally, the Berbice site would necessitate dredging, albeit of a different nature. A fresh evaluation of the two sites will be undertaken in 1996 with the aim of completing the planning and arrangements for financing promptly so that construction on the port can be initiated in 1997.

5. Other Policies

A programme for continuous dredging of the Demerara Channel and other waterways that require it will be developed and its funding sources specified from among the users of these routes.

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C. Air Transport

International air transport obviously is vital for Guyana, and in addition air transport services are important to Guyana's hinterland for the following reasons:

(1) Air transport is cost effective for low volumes of traffic.

(2) The development of a wider road network in the hinterland will proceed over a long period of time.

(3) Air transport supports a variety of activities and sectors, including agriculture, forestry, mining, tourism and social services.

It can be expected, therefore, that air transport, both internal and external, will continue to play an important role in Guyana's economy.

At present, air services are provided by Guyana Airways Corporation (scheduled and charter services) and private operators (charter only). Although GAC moves the greater percentage of the traffic, downtime for maintenance of the fleet results in frequent cancellations of the service. In the short run, the planned acquisition of new aircraft by GAC should make the service more reliable, but clearly management improvements are needed as well.

In the longer run, as part of the modernisation of the sector, plans need to be developed for the participation of private capital and management in GAC. As of this year, it is the only remaining State-owned airline in the entire continent in the Western Hemisphere. (And, close to home, government shares in LIAT have been divested recently.) Throughout the world airlines are moving rapidly not only toward privatisation but also toward large improvements in operating efficiencies, which realistically can be achieved only through private administration and injections of private capital. In addition, because GAC receives several tax exemptions, it is not making the contributions to revenues for national development that would be expected of a corporation of its size.

Under this Strategy, GAC's assets for domestic services will be divested to domestic investors, and the international assets will be transferred to the highest bidder, presumably a foreign investor. This policy has been pursued in many countries of the region in recent years.

At the same time, within the framework of this National Development Strategy existing restrictions on private operators in Guyana will be relaxed. Principally this involves:

(1) Eliminating all restrictions on general aviation, including the number of commercial seats that it may provide.

(2) Transferring the management of Ogle to the association of private aircraft operators, which repeatedly has shown the interest in and capacity to undertake such a responsibility.

Basic accompaniments to these measures include:

(1) An establishment of an autonomous Air Transport Authority for the management of the international airport at Timehri and other facilities.

(2) The establishment of air traffic centres at Lethem and Kamarang as soon as possible.

(3) The adoption of a open skies policy with respect to international airlines serving Guyana, in order to provide passengers with the greatest range of choice and greatest frequency of flights.

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D. Energy

1. Financial Policies

It has already been noted that energy development requires substantial capital investment, and acquiring such financing is a major task. The existing National Energy Policy suggests several financing options that include short-term and long-term borrowing by the Government, 100 percent direct foreign investment, and joint venture schemes between foreign investors and Guyanese companies.

As countries seek to improve their economic condition, there is great global competition for investment and assistance. Government must put in place appropriate fiscal and monetary incentives to attract investment and to be competitive, while ensuring that the country gets its fair share of benefits to be derived. Meanwhile, it should continue discussions on energy development with multilateral financial agencies as an alternative means of financing.

Discussion of investment must inevitably address the issue of pricing policy. The objectives of pricing policy include:

2. Institutional Policies

The need to enhance the institutional capacity for energy planning has already been emphasised, and new policies for that purpose occupy centre stage in this Strategy. In addition, at this time there still are not enough people in the country with the specialised skills to carry out energy planning. Government has decided to put in place private management that will secure the required expertise, through the transference of a majority shareholding to a strategic investor.

Another institutional issue involves the level of regulation that should be exercised, particularly over the electric utility. In the past there has been a temptation to give the utility special treatment because of its strategic importance and the difficulties it faces. It has become apparent, however, that priority has to be given to running GEC like a business, subject to overriding government policy for its broad outlines of development.

3. Technological Policies

Technological options have been divided into short-term (next two years), medium-term (up to five years), and long-term (five years and beyond). The objective here is to try to identify, on the supply side, the best mix of the sources of energy and fuels available and considered cost-effective. On the demand side, it includes introducing higher efficiency energy conservation devices, such as better stoves for wood fuel, energy efficient light bulbs, and fuel efficient vehicles. Technological options identified are outlined below.

a. Intermediate and Short Term

b. Medium Term

c. Long Term

4. Electricity Generation

The basic steps for implementing this policy of institutional reform, which illustrate its content, are as follows:

a) Projections of the nation's likely electricity requirements over the next ten years will be reviewed and refined, including a breakdown of those requirements geographically and by major economic sector.

b) GEC's present installations will be appraised realistically, on the basis of expected returns to the existing capital. The appraisal will commence at once.

c) GEC will be converted into a public corporation (see below).

d) Competitive bids will be solicited for an investment-cum-management programme that will satisfy the projected power requirements. The winning bidder will receive a specified share of the equity in GEC. The shares representing this equity will be known as Class A shares.

e) Simultaneous with the solicitation of bids, another proportion of the equity shares will be offered to the general public, at a discount from the face value, with no single individual allowed to purchase more than a specified amount of equity. These shares will be known as Class B shares. Any shares not taken up in the first offering will be auctioned in small lots, with no single individual permitted to purchase more than one lot. This step is one of the many measures in this Strategy that are basic to creating a more participatory economy.

f) Class B shares will be endorsed with the names of the individuals who purchase them, and their transfer will not be permitted for a period of five years after their sale, at which time they will become freely transferable.

g) Government will retain the remaining equity. Government shares will be known as Class C shares.

h) All classes of shares will have equal provisions in terms of access to dividends and voting rights.

i) After the transfer of shares is completed, and in any case no later than 120 days after the issuance of the Class A and B shares, a new Board of Directors will be elected by the assembly of shareholders and new corporate operating rules will be adopted. Each share will entitle the holder to one vote for the Directors and on each clause of the operating rules.

j) Special legislation will be passed to facilitate this restructuring of GEC. This legislation will contain provisions for converting GEC into a public corporation before the transfer of its equity takes place.

5. Other Energy Policies

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E. Sea Defences

1. Institutional Policies

The first need to attend to is the lack of policy-making authority in this sector. The Sea and River Defence Board should be reorganised to become a policy making board. It should have representatives from the Ministry of Housing and Ministry of Regional Development and will be legally responsible for the entire coastline of Guyana. The executing agency should be a Shorezone Management Unit outside the public service. This would allow the unit to attract qualified staff, provide higher salaries and to have its own financial regulation.

2. Costs

Recent experience has shown that an urgent priority is reduction of the construction costs for the sea defences.

Some approaches to cost reduction that merit exploration are:

On the first issue of rock supply, the US Army Corps of Engineers has offered to send a team to assess the overall quarry operations in the country. This offer should be pursued.

On the second issue of designs, the NEDECO section requires the least amount of rock. This is due to the fact that their lowest toe elevation is at 46 ft GD, while that of the SRKN'gineering design is at 41 ft GD. The NEDECO design should be used for all future works with minor modifications to suit site conditions.

The DHV and SRKN'gineering specifications require works to be performed in the dry. This will require the contractor to build an expensive cofferdam to keep the toe excavation dry. Also, continuous pumping during toe placing will be required. It is recommended that contractors be allowed to place the filter fabric and rock underwater during low tide periods. Mean low water spring and neap are approximately 46.2 ft. GD and 48.54 ft. GD, respectively, hence placement of an underwater toe at 46 ft. GD will be done at submerged depths of approximately 3 ft.

3. Contractual Arrangements

The types of contractual arrangements will be examined with a view of selecting those that best suit the local scenario. Basically, works may be undertaken by force account or by contractors. Use of force account should be scaled down and eventually abandoned altogether.

The size of the construction undertakings funded by external donors tends to be such that it excludes local contractors from bidding for EC and IDA tenders. It is urgent that this impasse be addressed especially as the next programme to be tendered, that funded by the CDB, is approximately US$7 million and will involve two separate contracts.

Suggestions for resolving this are:

(a) Combine donor agencies' programmes to attract international contractors.

(b) Split individual programmes so that regional and local contractors may participate.

(c) Separate the supply of rocks from that off construction of the works and treat as two contracts, the former being administered by the Government and the latter by regional and local contractors.

(d) Urge local contractors to form joint ventures.

The selection of the method to be employed should be sanctioned by the Government of Guyana and the respective donor agency and the recommended methods are Nos. 1 and 4 above for large contracts (over US$12 million) and No. 3 for smaller ones.

4. Cost Recovery and Financial Management

In light of the evident failure of previous modes of financing maintenance of sea defences, it is necessary to identify other modes that will be both sufficient in magnitude and sustainable. Sea defences contribute directly to the economic well-being of at least 85 percent of the population, so the funding source for maintenance must be broadly based.

The following are possible revenue strategies for a sea defence cost recovery programme:

(a) Impose a 0.75 percent sea defence levy on the value of all imports.

(b) As the property registry system is modernised, implement a property tax of G$200 per acre (in 1996 prices).

(c) Rely on general budgetary revenues to close the remaining financing gap for the maintenance of the sea defences until the above revenue sources are fully operational.

The management of both the financial and operational aspects of the sea defence system needs to be as streamlined and efficient as possible, with built-in mechanisms to ensure continuously that costs are kept as low as possible. The following policy is adopted in this regard:

The revenues collected from above mechanisms would be deposited in a special trust account for maintenance of the sea defences, in the Central Bank. The Sea Defences Board, in effect an intergovernmental management committee for the trust account, would monitor the collection of revenues, their disbursement, and the progress made in the maintenance efforts. It would also submit annual estimates to the Ministry of Finance for he required complementary funding from the general budget, in the expectation that eventually this line item would be phased out.

5. Areas to be Protected

The strategy will prioritise the areas along the coastland that require protection. Land use and shallow foreshore levels should be the main criteria used for selection with housing areas being treated as urgent. These areas will include the Essequibo Coast between Supenaam and Marias Delight, Wakenaam, Leguan, East Bank Essequibo, East and West Demerara and No. 78 and No. 83 on the Corentyne Coast.

The current IDA, IDB and EC programmes will provide protection to some of these areas. Future funding should be allocated to other unprotected and critical areas in these locations.

The CDB programme is primarily providing protection to the facade drain in the West Coast Berbice area. This may not have been a wise choice and this programme will be reviewed.

In areas where there are no residences, retirement of the sea defence line, when breached, may be the recommended approach and each case should be examined critically. If a small section of an exposed coastline is protected, then continued erosion upstream and downstream will require additional lengths of the shoreline to be protected or a headland will be created. Both scenarios may not be the desired solution in later years.

6. Procurement

It has been our experience that the time span between critical area identification and the commencement of physical works has been too long. Also, critical areas identified under the CDB programme now support mangrove trees and the consultants were obliged to change the overall scope of works. This has been communicated to the Bank and concerns have been raised that approval for this revision may not be forthcoming in a hurry. This will change the programme and may lead to increased costs.

It s recommended that the Project Executing Unit maintain and update at appropriate intervals records of critical areas and that donor agencies expedite procurement procedures. The latter may be assisted by using shortlists of local and regional consultants and contractors maintained by the Project Executing Unit.

7. Training

Training of local staff should be actively pursued. The US Army Corps of Engineers recently offered assistance at this area, including assigning engineers to their research laboratories in the USA. This should be accepted.

8. Other Sea Defence Programmes

Together with rock armouring protection there are other viable methods of protection. These include management of mangrove and placement of groynes. Both have been recommended in the Swedeplan/SSPPA report and their recommendations should be carried out. Mangrove management should be actively pursued in areas such as Mahaica to Rosignol and the lower Corentyne areas. This approach may provide protection to coastlines that otherwise will have to be retired.

9. Land for Houses

No doubt the sea defence problem continues, mainly, through the installation of infrastructure and housing in areas adjacent to the sea defence line. A final recommendation is that no land within a certain distance of the sea defences should be used for the construction of any permanent structure. This distance will vary along the country's coastline but should not be less than 200 feet. At locations along the coast where there is no intensive housing development, any plans for such development should be assessed taking into consideration the need for present and future sea defence protection. Where possible, future housing development should be restricted to areas south of the Public Road.

Note that a sea defence structure has a design lifetime and a collapse is possible anytime and at any place along the coastline. Future development along the coastlands should be placed with large set backs from the sea defences to protect against flooding.

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F. Drainage and Irrigation

The strategy for achieving sustainable operation and maintenance of the drainage and irrigation system will emphasize that the new formed D&I Board will take the lead in developing a simplified, two-tier institutional structure, which will be financially sustainable.

1. Local Level

Farmers themselves will determine the most appropriate institutional arrangement for managing the secondary systems in their locality, whether through the existing Local Government Authorities (LGAs) or through the Water Users' Associations (WUAs).

(a) Water Users' Associations

The Board will support and encourage the formation of associations of farmers responsible for the operation and maintenance of secondary systems. Once fully operational, these WUAs will be self-financing, self-regulating, and self-governing and will assume full control over the secondary system in their localities. The Board will also propose a legislative framework within which the WUAs will operate. It is expected that each WUA will elect an executive committee that will be responsible to regional and national farmers' organisations. This committee will manage the day-to-day operation of the WUA and maintain accounts and records of their activities.

(b) Local Government Authorities

Where farmers are satisfied with the current institutional arrangement, the Board will support and strengthen the capacity of the LGAs to administer the operation and maintenance of secondary systems by providing training, advice and support.

Water users, whether through WUAs or LGAs will bear in full the costs of the operation and maintenance of secondary systems. Rates set and collected by the WUA or LGA will eventually cover all costs associated with the secondary system. In addition, farmers will pay rates to cover costs for the operation and maintenance of primary irrigation canals, and to contribute to the operation and maintenance of conservancies.

MMA/DA and the East Bank Essequibo have been identified as suitable areas to carry out pilot programmes. In these areas the Board will test the viability of WUAs and develop the capacity to promote WUAs elsewhere in the country. Where LGAs continue to take the responsibility for secondary system operation and maintenance, the Board will set up a support programme that will focus on identifying the main organisational, financial and attitudinal factors impinging on the efficient and effective management of the secondary systems. Technical assistance and supplies will be provided to the LGAs in such areas as accounting, bookkeeping, rate setting, and collection and management of physical operations.

The Board will play an important role in establishing standards for operation and maintenance, implementation and monitoring of the activities of the local level entities, and ensuring that the secondary system functions satisfactorily, in an environmentally sound manner.

2. National Level (the Drainage and Irrigation Board)

a. Administration

The new Water Board will assist the Government in developing policies, planning, coordinating, approving and regulating all public irrigation, drainage and flood control projects and districts. It also will ensure compliance with national policies and norms through monitoring and supervision of construction, operation and maintenance activities in the regions.

b. Primary system operation and maintenance

The Board will develop the appropriate institutional arrangement for the planning, design, execution, and monitoring of physical works. The Board also will ensure that any such arrangement will be:

(i) Accountable: management must be transparent and accountable to system clients and Government.

(ii) In line with national standards the Board will closely supervise and monitor all works to ensure conformity to national standards.

(iii) Representative members of LGAs, WUAs, conservancy boards, and those involved with other aspects of water resource management will be represented in the decision-making process.

c. Drafting of new legislation

The Board will immediately commence the preparation of new legislation for the drainage and irrigation sector. In doing so, the Board will review existing legislation, study closely the legal implications of this Directive and the experiences of the pilot programmes and, with the Ministry of Agriculture, propose changes in the existing legal framework.

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G. Hydrometeorological Service

1. Strengthening the System

The strategy for the Hydrometeorological Service will lead to the upgrading of existing stations and the working environment, including improved communication links to data collection centers and automation of stations, plus the recruitment of qualified staff. To achieve this goal the following steps will be taken:

- Reactivation of the stations necessary for the design network to improve forecasting capabilities.

- Improvement of the staff's skills through seminars, scholarships, and in-the-job training.

- Developing research capabilities and other related skills.

2. Financing

The Hydrometeorological Service should be an autonomous body, having the ability to:

- Approach donor agencies (international and national) directly.

- Fix wages and salaries.

- Determine prices to be charged for information to offset expenditures of the Service.

- Fix a percentage of the budget from all national development projects that use hydrometeorological information.

It will begin to levy charges on users such as airport authorities that to date have been receiving these services free.

3. Institutional policies

- Improve the collection/dissemination of hydrometeorological information through training and recruitment of qualified staff.

- Introduce monitoring of ocean parameters relating to control and management of the fisheries.

- Development of a precise legal framework for the operation of the entity relating to data collection, information, and monitoring.

- The Hydrometeorological Service should be a permanent member in the water boards and related agencies.

1. National Energy Policy Committee, Energy Policy of Guyana, Georgetown, July, 1994.

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