The current load-shedding exercise may not only be due to the damaged West African Pipelines but the lack of funds for Volta River Authority (VRA) to buy enough crude oil to generate enough power.
A document cited by Citi Fm indicates that the VRA is cash-strapped due to inefficiencies at the Electricity Company of Ghana (ECG) and the government’s failure to pay for power used by its agencies.
It said: “The increase in staff and administrative costs of ECG between 2008 and 2011 (144% and 880%, respectively, are very high but reliability of service is poor and deteriorating. These coupled with the high ATC&C losses undermine the legitimate demand for tariff adjustments to cater for inflationary increases in prices, exchange rate depreciation and their impact on cash requirements for equipment purchases, debt servicing and payment for power purchases billed in foreign currencies.”
The Chief Executive Officer of the VRA, Kweku Awotwe in an interview on the Citi Breakfast Show on Monday made the admission saying, “there is some truth to that although they are slightly two different issues; one is megawatts in the system and the other is cost to operate.”
The document further noted that due to the “poor financial situation of ECG, the payment of arrears to the VRA for the purchase of power has been affected. These arrears, coupled with the high cost of power generation and inability of the Government to pay for power consumed by its Ministries, Departments and Agencies, have made it impossible for the VRA to generate enough funds internally to procure fuel for power generation. The Authority has therefore been relying on short term credit from commercial banks and Government support to procure LCO for power generation.”
Mr Awotwe explained that due to the absence of tariff increment, VRA’s cost of energy production has increased from “300 million to over 700 million last year to operate because I don’t get gas.”
According to him, “with no tariff increase, with the currency depreciating, there is no way by myself I can support the purchase of 50 million dollars of crude every 20 days and so the government has to step in.”
The VRA Boss nonetheless mentioned that the government over the past few months have been supporting in the purchase of crude to keep saying, “I think the government wants to make sure that our plants are running and they are therefore giving us the support we need in the absence of the tariff.”