A US$ 95 million debt owed the Volta River Authority (VRA) by the Volta Aluminium Company Limited (VALCO) is crippling the state hydro power producer’s ability to pay for gas supply for power generation.
VALCO, over a period had accumulated so much debt, which as at October this year stood at US$95 million, to which the government was supposed to pay US$42 million as per VALCO’s agreement with the government.
A highly placed source told the GRAPHIC BUSINESS that although VALCO’s debt may be significant, other debtors, including metropolitan, municipal and district assemblies (MMDAS) and ministries, departments and agencies (MDAs), had contributed to the current state of VRA and subsequently, the power crisis being experienced.
Although VRA does not sell power directly to MMDAs, it sells to the Electricity Company of Ghana (ECG) and the latter distributes so they are supposed to pay the ECG,which will in turn pay the VRA and other power generation companies.
The VRA is currently indebted to Nigeria Gas (N-gas), which supplies gas through the West African Gas Pipeline Company (WAPCo) to the tune of US$180 million and the Ghana Gas Company Limited, a total of US$148million, for gas supplied to power the VRA’s thermal plants for power generation.
“We are shedding power because the VRA has no money to buy crude or gas they need to power the plant. So if the VRA had all these money it is being owed you can imagine what it can do. It owes the West African Gas Pipeline Company (WAPCo) about US$180 million which has resulted in a cut of supply to Ghana. If all these debts were settled it could have defrayed if not all part of the cost,” the source said.
Impact on VRAs operation
According to the source, the major problem of VALCO’s debts and other debts to the VRA is the kind of agreement the country signs with some of these companies.
The power rate given to the various power generation companies vary and that the VRA is being less than what it costs to produce the power.
“This Kar Power thing they have brought, they are going to pay them about 55 pence or pesewas per kilowatt hour. If the VRA distributes and you are giving them about 12 or 14 pesewas per kilowatt how would it survive? Is it because it’s public? If the VRA or ECG were private companies they would have closed down 30 years ago,” it said.
The source said even if the VRA was not for profit at least they should be able to pay for the cost of production.
Power generation
Ghana has installed a capacity of 2,884.5 megawatts (MW) of power which is more than what the country needs yet it is unable to generate up to that capacity.
About 1,000 MW of thermal generation has been added in the past 15 years, bringing the country’s generation capacity to 2,125 MW, which is made up of about 50 per cent hydro and 50 per cent thermal plants.
However, inadequate and unreliable power supply remains a major challenge to economic growth.
The government has procured a 250 MW power barge by Kar Power from Turkey to augment the country's electricity shortfall.
The move has attracted several criticisms. The paper’s source said that the idea of going for the power barge was not a smart one because the barge would add just about 250 MW of power.
“How much are we spending to bring that barge and how much are we to pay for the gas so we can have power. The problem is that we are not able to generate up to our installed capacity,” it said.
Recommendation
The source explained that privatising of the power producing countries was not the solution to the country’s power crisis, but instead managers of the economy must focus on signing agreements that would protect the interest of the nation.
“Privatising these companies is not a solution, because the private man will not send power to the rural areas where they know people cannot afford to pay for the power supplied, and he cannot recoup his investments,” the source said.
Instead, the nation he said must set the right priorities when it comes to signing agreements and prevent politics from dominating the discussions.
“I think as a nation we should have a holistic approach, to set our priorities right. We should not easily give in so much in signing these agreements. If the VRA or ECG was a private company, it would have closed down 30 to 40 years ago, because you cannot operate like that. You buy it and sell it at a lower rate, who pays for the difference?” it further quizzed.
It added that, “let’s assume they are not there to make profit but just to deliver service, at least they should be able to break even, or pay for the cost of producing the thing. Our interest should be well taken care of. We should find a way of supporting the social intervention programmes that help power supply such as the rural electrification programme.” - GB
writer’s email: ama.baafi@graphic.com.gh
PULLQUOTE
We are shedding power because the VRA has no money to buy crude or gas they need to power the plant. So if the VRA had all these money it is being owed you can imagine what it can do.
KEYNOTE:
- The VRA is an electric power utility corporation whose primary function includes power generation, transmission and distribution for industrial, commercial and domestic use.
- VALCO, located in Tema is a major producer of primary aluminium for the world market. Its establishment was a result of the vision of the first President of Ghana, Dr Kwame Nkrumah, to establish an integrated aluminium industry in the country.
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