Business News of Monday, 19 February 2018
The country’s largest power producer, the Volta River Authority (VRA), is seeking to privatize most of its non-core businesses, as the Authority strategises to become one of the leading power producers in the sub-region.
The initiative is also meant to ensure a more transparent budgeting for tariff requests by the Authority to the Public Utilities Regulatory Commission (PURC) so that nominal costs are not passed on to consumers.
Under the privatization drive, the VRA seeks a majority shareholder for four of its subsidiaries–Akosombo Hotel Limited; the Volta Lake Transport Company; Kpong Farms; and VRA Property Holding Company (VRA PROPCo).
Two other subsidiaries, the VRA Health Services Limited and VRA Schools are to be set up as separate self-sustaining entities, given their ‘social service’ role.
Kweku Andoh Awotwi, Board Chairman of the Authority told B&FT in an interview that: “All of them must be privatized. Government is ready for VRA to take a minority, about 49 percent and private investor take 51 percent stake.
That case can be made for hotels, transport company, farms, and the property company. The idea is for a private partner to come in and take majority. VRA will stay in to keep the government’s interest and we will all move together. But the private company will have the freedom to operate, which is good.”
He added that: “In respect of the school and hospitals, there is a bit of social services to it, especially the hospitals. Yes, the idea is to make them self-sustaining companies but they may not have the same privatization model as the lake transport or hotel, but we will find a way to set them up by themselves somehow.”
The state-owned power generating company is currently responsible for the wages and salaries of about 520 employees in its property department, as well as its hospitals and schools, which do not form part of its core business.
The delineation of its non-core businesses is expected to lead to a reduction in cost of production and ultimately end-user tariffs, as VRA would be more efficient.
Mr. Awotwi said: “It has to go on. It is something we have been talking about for a long time. I think what this government is saying is that let’s do the things we said we would do. There is some value to it and the value is very simple. VRA is a power company, what business do we have running schools, hospitals or lake transport?”
He explained that: “Sixty years ago, when Nkrumah envisioned the VRA, it was because we didn’t have enough people like that to help us build schools, hospitals and so on, so he saw it as under one roof we can do so many things. Without going to the theory of it, at some point people will take over. The state will start to help other private people come in. Frankly, that is what is happening in other countries, particularly in Asia.”
The Akosombo Hotel Limited, 3-star luxury 50-room hotel situated on a serene mountain overlooking the majestic Akosombo Hydroelectric Dam in the Eastern Region, is one of the subsidiaries up for privitisation. The hotel is the main entity that promotes tourists activities in the area with the Dam and Volta Lake at the core.
Volta Lake Transport Company (VLTC), which operates water-borne transport with 19 fleet of passenger vessels, cargo ships and barges, is also another subsidiary for which management and private capital is sought.
The Kpong Farms, was set up to undertake viable agricultural venture in irrigation and mechanized farming, animal husbandry and meat processing by harnessing the water resources of the Volta Lake.
The VRA Property Holding Company (PROPCo) currently performs the mandated functions of Planning, Acquiring, Developing, Maintaining and Managing the Authority’s Townships, Estates and Properties. The company which previously operated as Support Service to VRA on a non-profit basis now functions as a Strategic Business Unit to generate revenue.
Mr. Awotwi argues that: “Samsung, Toyota, and Hyundai are big privates companies but guess where the big help came from?Their governments pushed them. Very similar idea with VRA; ‘we can help you to a certain point but after sometime we expect winners, champions’.
Sixty (60) years on, we have all kinds of transport companies, schools, and hospitals. So that [privatisation] has to go on. I think that government is also very serious about and it is consistent. From my point of view, we must finish what we started.”
He believes that the VRA must remain an active participant. “In my opinion, 10 or 20 percent stake in these private companies is too small. We need to be an active participant without driving it. If you have 60 percent and I have 40 percent, you cannot do anything without me. Yes you are the boss, you collect the money but you have got to worry about me too.