Listing VRA and GRIDCO: Analysts urge due diligence

Business News of Wednesday, 22 February 2017



Dr Steve Manteaw ISODECDr. Steve Manteaw, Co-Chair of the Ghana Extractive Industries Transparency Initiative

Some analysts in the energy sector have cautioned of long term costs to government should it rush through the process to list the Volta River Authority (VRA) and the Ghana Grid Company Limited (GRIDCO) on the Ghana Stock Exchange (GSE).

Though they contend of the benefits in restructuring the operations of the institutions, the analysts fear of a potential dip of the policy should government fail to undertake due diligence.

“This is the way to solve the inefficiencies in the country’s energy sector. We should not rush into it; there is a lot that has to be done which is why we need to undertake some market intelligence and even the timing must be taken into consideration and that is very important if you want to generate a lot of market interest,” the Co-Chair of the Ghana Extractive Industries Transparency Initiative (GHEITI), Dr. Steve Manteaw told Citi Business News in an interview.

President Akufo Addo, in his State of the Nation address on Tuesday, disclosed that listing the VRA and GRIDCO on the domestic bourse formed part of a master electricity plan being developed by the government.

The move when successful will also solve the funding challenges facing the power companies.

Currently, the debt owed institutions in the energy sector is estimated at 4.4 billion cedis.

The development has also had a toll on performance of the financial sector as most banks have lent to the state power institution the VRA.

Dr. Steve Manteaw further commended the policy citing its impact in promoting efficiency on the power sector.

“The decision is good because it helps to raise the needed capital for improved operations, improve accountability as shareholders will have a stake in deciding the requisite management to ensure efficiency.”

In a related development, the Co-Chair of GHEITI has commended government for revising all power agreements by the NDC government.

He has however urged circumspection in order to avert possible judgement debts to be incurred on contracts that would be cancelled in the process.

“We’ve come to a point where we need to rationalize all these agreements that we have signed and see whether they’re really useful to our current circumstances,”

“We need to be mindful of the consequences especially with ending some of the agreements so that we do not earn judgement debts considering the current economic situation,” Dr. Manteaw asserted.