Top Officials Urge Gov't To Review VALCO Accord

HIGHLY-PLACED officials in the country have called on the government to review without delay the electricity tariff currently paid by the Volta Aluminuium Company (VALCO) to reflect prevailing realities.

Pleading anonymity, they said government cannot continue to subsidise a giant company like VALCO and asked that new negotiations should open by December, this year, instead of the scheduled 2003.

The last review was in February 1998. Under the five-year agreement, the next negotiation is in 2003.

One of the officials said after 30 years of low electricity tariff, the time has come for the company to pay tariffs that reflect the world average price and suggested that it should be possible to open negotiations by December, this year.

“VALCO cannot enjoy the privilege under which it is treated as a baby, when the poor populace is very often called upon to make sacrifices to sustain the producing agencies,” said the officials.

They questioned the moral justification for the poor to subsidise a giant company like VALCO.

The Volta River Authority (VRA), they said, cries for increases in tariff, but however justified the company is, the increases should not be borne by only Ghanaians.

The officials argue that it should be possible for VALCO to pay the average 3 cents per kilowatt hour even though some smelters pay about 3.5 cents per kilowatt hour. At the moment, VALCO pays below two cents for one kilowatt hour.

They maintained that Ghana, under the Heavily Indebted Poor Countries (HIPC) status, deserves fair price for the power that it generates, pointing out that there is a strong urge for a new agreement, which would take into account the worldwide price of power.

Unlike the VRA, which wants the previous agreement to operate until 2003 when there will be another negotiations, the officials who are outraged by the low rates being paid now, are calling for immediate re-negotiation. VRA is said pushing for tariff increases because it is under pressure to find money to fund its activities.

According to them, they do not dispute the fact that VALCO was a genuine pioneer industry in 1962 but it cannot claim that status now and recommended that the status of VALCO must be made the same as any other industrial concern operating in Ghana.

They submitted that the time has come for the company to be integrated into the economy and the matter should come up for discussions during the suggested December talks.

Research has shown that some aluminium companies are folding up because of high power tariffs. Information has it that in the United States, Bonneville Power Administration (BPA), the region's federal hydropower authority, asked 10 Northwest aluminium smelters to shut down for up to two years to ease demand for power, which has soared past BPA’s capacity to supply.

“It is simply not possible to expect those companies to come back on line after two years and restore capacity even under the best of conditions,” said Robin King, spokesman for the Aluminium Association, an industry advocacy group.

Some of the officials said the company has never been integrated into the local economy and the aluminium it produces is wholly exported but money accruing is not treated as revenue for tax purposes just as it does not reflect on the export earnings of Ghana.

They said the time has come for VALCO to be called to order so that it pays attention to the needs of the country. They said the over-generous concessions formed part of the 1962 agreement and it was done in the expectation that the company would exploit the country's bauxite deposits.

Records have it that the company has paid only deposit to the country since 1999. They wonder whether there is any justification for other industries to be treated differently, after the three decades of over-generosity.

The outraged officials do not see why VALCO tariffs cannot be reviewed every year by the Public Utilities Regulatory Commission (PURC) instead of the present five-year period.

Sources said last November, the then Cabinet approved some form of agreement, which Parliament was expected to ratify.

However, during the last quarter of the year, quorum was difficult to attain in the 200-member House, hence those agreements are yet to be approved.