Give Us More Monies – VRA Demands

The Volta River Authority (VRA) has called for an immediate upward adjustment in electricity tariffs to improve the company’s finances.

It said to ensure sustainability of its operations, “it is imperative for the Public Utilities Regulatory Commission (PURC) to stick to regular tariff adjustments to reflect cost of generation”.

That, it added, would also help attract independent power producers (IPPs).

The VRA made the request at a meeting with the Parliamentary Select Committee on Mines and Energy in Parliament Thursday to discuss the acute energy shortage the country is grappling with and the measures needed to address it.

Officials of the Ghana Grid Company (GRIDCo) and the Electricity Company of Ghana (ECG) were also present to state what the problems were and how, in their view, they could be dealt with.

The Parliamentary Committee was led by its Chairman, Dr Kwabena Donkor (NDC Pru East), while the VRA team was made up of the Deputy Chief Executive in charge of Engineering and Operations, Kirk Koffi; the Deputy Chief Executive in charge of Services, Mr Maxwell Odoom; the Director of Thermal Energy, Mr Richard Badger; the Director of Hydro Power, Mr K.B. Amoako; the Director of Special Engineering, Mr Steve Doku, and the Corporate Affairs Director, Mr Samuel Fletcher.

Although the media were refused participation in the meeting, the Daily Graphic can confirm that the issue of tariffs came up for discussion.

A copy of a power point presentation by officials of the VRA at the meeting was made available to newsmen.

It is titled: “Presentation to Parliamentary Select Committee on Energy”, and dated March 7, 2013.

Dr Donkor said the media were not invited to sit in the meeting because the committee wanted the representatives of the VRA to “tell us exactly what problems they have” and added that the committee feared that if the media were present, the VRA officials would not delve deep into the problems but rather “play to the gallery”.

He said although the VRA officials had given an assurance that the problem would end in April, the committee was concerned about medium to long-term power supply and the reliability of power.

He said reliable power supply was crucial to the country’s economic growth, hence the move by the committee to have a clear view of the problems and how to deal effectively with them.

The Ranking Member of the committee, Mr K.T. Hammond (NPP, Adansi Asokwa), told journalists that the VRA and other companies had explained their side of the story and added that the committee members were seeking more details.

The VRA document said major tariff reviews were required to be carried out every two years and quarterly adjustments made to account for changing crude oil prices, currency fluctuations and other parameters.

“Considering the volumes of crude oil VRA purchases, a small change in the price of crude oil could result in a huge disparity between income and expenditure. For example, a $1 increase in crude oil price could lead to a cost increase of between $1 million to $3 million in a quarter,” it said.

“This trend has adversely affected VRA’s balance sheet and ability to fund or attract funding for our expansion projects,” it added.

According to the document, the company was currently embarking on many projects to ensure adequate power supply over the medium to long term which could only be completed in a timely manner if it had the right financial backing.

It assured the committee that the power supply situation would improve by “mid-year” and added that efforts were needed to reduce distribution losses and improve reactive power generation within the power system.

It also called for public co-operation to achieve the targets set.

The document, detailing the challenges faced by the company, said it cost the VRA about $3 million a day to run its thermal plants using light crude oil (LCO), adding that that was double the cost of using natural gas.

A cargo of LCO, it said, was used for thermal generation every 20 days at a cost of about $55 million.

From September to December 2012, about $340 million (six cargoes) were used to generate thermal power using LCO. The government intervened by purchasing five cargoes of crude oil.

For the first quarter of 2013, it said, the VRA expected to purchase six cargoes of LCO, which would cost about $340 million, to power available thermal plants.

“The government has purchased three cargoes of LCO to help the situation,” it added.

Giving a background to the recent energy crisis, the document said the disruption in gas supply from Nigeria resulting from the damage to the West Africa Gas Pipeline caused a generation deficit of about 200 megawatts which had necessitated the frequent shedding of load since August 2012.

Planned maintenance and forced outages aggravated the situation.

Prior to the damage to the gas pipeline, the document said, the reserve margin was inadequate, resulting in intermittent load shedding in the event of planned or unplanned outage of a major unit.

On the current status of generating units, it said the country currently had an installed capacity of 2,411.5 megawatts, a dependable capacity of 2,155 megawatts and a “peak plant loading” of 1,603 megawatts.

According to the document, the lack of gas supply had limited generation from available thermal plants, while overdrafting of the hydro resources to complement inadequate thermal generation increased hydro risk in the future.

It said due to inadequate generation capacity, available VRA plants sometimes were required to operate beyond service hours, adding that the situation affected the efficiency of the units and plant life.

Source: Daily Graphic