VALCO Must Pay More For Power - Gov't

The government negotiating team on the supply of power to the Volta Aluminium Company (VALCO) has sent a strong signal to the company’s negotiating team that it should be prepared to pay more for the power it gets from the Volta River Authority (VRA).

At its maiden meeting in Accra, the team’s chairman, Mr B.J. da Rocha, stated unambiguously that the country can no longer subsidise power for the company. He submitted that, “the price paid by VALCO for power must bear a direct relations to the cost of producing and transmitting the power to the company.”

Information has it that the company buys power below two cents for a kilowatt-hour at the cost of about 5 cents. He declared: “What it (VALCO) pays now is too low and is well below the cost of producing the power and additional power when available.

“The reasons for the new power allocation are obvious. There have been changes in population, growth of industries, and higher demand for power at all levels. These clearly justify, the need for a reappraisal of power allocation,” said a determined da Rocha.

Another proposal is that electricity supply under the present circumstances should be a mix of hydro and thermal power for all consumers, including VALCO, to ensure equitable and optimum use of facilities and resources. Chairman da Rocha referred to the increasing demand, which prompted the setting up of the Aboadze Thermal Plant near Takoradi, to buttress his argument that demand for power has changed significantly since the agreement was signed some 40 years ago.

The negotiating team wants the status of VALCO, as a pioneer industry, to be reappraised to reflect the prevailing circumstances. Under the special status, the company had some privileges and exemptions, which it still enjoys, even after 30 years.

Figures from the Internal Revenue Service office show that from 1967 to 2001 the company tax from VALCO is on the average $8 million a year because the company pays corporate tax on what is earned from tolling charges and not from what it earns in the sale of aluminium manufactured from the smelter.

Mr da Rocha expressed the hope that the negotiations will be conducted in a business-like manner and realistic way to reach mutual understanding. He was optimistic that the negotiations will not drag on beyond 90 days. “Should there be a deadlock after 90 days, each side will consider its options and future action,” he added.

The two sides are expected to meet late Monday afternoon during which the VALCO team will present its comments on the power contract, agreement draft, while the VALCO Status Agreement will be presented to the company’s representative by Wednesday.