VRA must be saved!
Last week, the Senior Staff Association of the Volta River Authority (VRA) gave the public an insight into what could be amiss with the country's power system in both generation and distribution.
Advertisement
Those revelations, captured on the front page of the Monday, May 13, 2024, edition of the Daily Graphic, gave a vivid account of the financial struggles of VRA, the nation's foremost state-owned enterprise in the power sector.
Ultimately, the association made a strong case about how a deficit in financing has left VRA in dire straits. As a basic necessity for industrial relevance, electricity is a vital economic commodity that sustains businesses, ensuring the cycle of jobs, goods and services that turn the wheels of a country's economy.
From heavy industrial concerns with manufacturing plants to artisanal enterprises and simple business shops, electricity is an essential resource. It is for this reason that the availability or otherwise of power is a national security issue. It is also the reason that power generation cannot be treated as just another enterprise.
In the scheme of power generation, independent power producers (IPPs) have become an integral component by adding to VRA's generation capacity. But this has come at a cost to the average consumer, households and businesses, through the passed-on cost.
It is trite knowledge that private businesses thrive on profit. This is why the IPPs constantly remind the government of its financial obligation towards them for shoring up power generation in the country.
According to the VRA senior staff, the state remits the IPPs $43 million every month for their power supply into the system. This amount comes from the Cash Waterfall Mechanism created by the government to manage the financial requirements concerning power generation and distribution.
By the arrangements relating to the Cash Waterfall Mechanism, it is only after the $43 million is paid to the IPPs that VRA and other entities with interest in the power generation and distribution chain will have their respective shares of what remains in the fund. What it means is that if the fund is exhausted after paying the $43 million to the IPPs, VRA and the others receive nothing.
"The irony of this situation is that even the IPPs who are not generating any megawatt onto the (national) grid now are also paid," the senior staff were reported to have said. This arrangement is said to be the result of the contract signed between the Electricity Company of Ghana (ECG) and the IPPs.
But when viewed against the fact that VRA generates 67.5 per cent of the country's current power supply, with the IPPs generating only the remaining 32.5 per cent, there cannot be excuses to continue to under-fund VRA.
The financial albatross of the monthly $43 million payment to the IPPs has come about as a result of the desperate search for a solution to local power generation which compelled the prevailing contract between the Electricity Company of Ghana and the IPPs.
It is time, therefore, for the state to pay greater attention to VRA, its plants, assets and other infrastructure for the sole reason that it has been up to the task during critical moments such as the current power challenges.
This should include resourcing the authority adequately to enable it to procure vital spare parts to repair and maintain its infrastructure for power generation and distribution. This is an urgent call, given that but for VRA’s operations, the country could be darker than now when the IPPs are producing just one-third of the current power supply.
VRA must be saved!