Energy Crisis Looms

...VRA can't sustain power supply
...150% hike in tariffs soon

Soon! And very soon! The country will be hit by threats of power crises. A heated debate on a proposal by the Volta River Authority (VRA) for a hike in electricity tariffs may also bounce into the public domain soon.

Chronicle can reveal that there are quiet negotiations underway between the VRA and the Public Utility Regulatory Commission (PURC) over a possible increment in electricity tariffs.

Credible documents sighted by Chronicle revealed that VRA has submitted a proposal to PURC requesting that tariffs should be increased to ?473 per unit as against the current rate of ?194 per unit.

In the absence of such an increase in tariffs, VRA warns that they will not be able to sustain power supply in the country.

According to other separate documents, VRA stated that the country is at the crossroads and that it is time for consumers of power to pay realistic rates.

The authority reiterated that they will be unable to sustain power supply at the current rates since they are selling power at a rate lower than the cost of generation and imports.

Chronicle also gathered that the authority still owes CIE of the Ivory Coast, $33 million, representing cost of importation of power.

VRA also owes the government about ?285 billion, which also represents loans from the government to import crude oil for the running of the Thermal Plant in Takoradi.

It was also gathered that aside of these debts, the authority owes several other commercial banks.

When Chronicle contacted Mrs. Ellen Essilfie, head of the Public Relations Department, on this development, she confirmed the story and reiterated that VRA will not be able to sustain the supply of power at the current rates because what consumers are paying does not even cover cost of supply.

Mrs. Essilffie told the Chronicle in an interview yesterday that last year they asked PURC for ?432 per unit, but PURC approved only ?194.

"This means from we started off with a deficit, even this ?194 has also suffered depreciation, at the time the ?194 rate was approved, the exchange rate was ?7,151 to a dollar. Now with the depreciation, the value of ?194 has gone down in real terms. In spite of this, VRA is still charging ?194 per unit," she said.

Mrs. Essilffie also noted that the total energy demand for this year is projected as 8573 GWh.

She said out of this, hydro is expected to provide 4950GWh, while thermal generation and imports are also projected at 3623GWh.

Last year, estimates revealed that thermal generation was 1226 GWh.

This year the level of the dam has reduced significantly "Because we cannot cover cost of supply of power we are unable to meet the cost of importation of fuel for the Takoradi Thermal Plant. We have been depending on government for the importation of crude oil," she added.

The Public Relations Officer said that low tariffs are threatening VRA's ability to sustain power supply.

According to her, VRA is unable to secure funds from the capital market to undertake expansion and quality improvement projects as a result of the low tariffs which have dragged the authority into indebtedness.

"Projects, like the Prestea-Obuasi line, have been stalled, which is an impediment to the evacuation of power generated from the Thermal Plant at Takoradi . We could have supplied 635GWh but because of the problems of the lines we can only evacuate 450GWh," she added.

The VRA official also noted that with the increase in demand for power and significant reduction in the level of the Akosombo dam, more crude oil needs to be imported to sustain the supply of thermal energy.

Mrs. Essilffie noted that even though CIE sells to them at 5 cents per unit, they sell to consumers at 2.7 cents per unit.

When Chronicle asked her what would change if tariffs were raised to ?478 per unit, she said the authority will at least recover cost and may be probably on the road to sustaining power supply.

The authority, she explained, could also manage with the importation of crude oil for the running of the thermal plant.

It was gathered that already PURC has held series of public hearings on the issue of tariffs.

The main concerns expressed by the public, Chronicle gathered, was that incomes and salaries were low and that an increment in tariffs would be a big blow to consumers.

VRA officials told Chronicle yesterday that even though they share the concerns of consumers, there is still the urgent need for consumers to pay realistic tariffs.