We need to invest in VRA for cheaper energy production — Minister
The Minister of Energy and Green Transition, John Abdulai Jinapor, has called for more investment in the Volta River Authority (VRA) to enhance energy production and affordability in the country.
He said an estimated $840 million was spent annually on paying the independent power producers (IPPs); an amount he said with a bold decision in the energy sector, could be channelled into strengthening VRA's energy generation capacity instead.
“If we do the economics, and you look at how much we pay to IPPs every month, it is enormous. We're talking about $70 million every month. That is about 840 million dollars every year, times the number of years the IPPs have been operating,” he said.
“Don't you think that if we had escrowed this money, we could have built more thermal plants with VRA and sell the power at a cheaper price? But the reality is that sometimes we all pretend,” Mr Jinapor said.
Mr Abdulai Jinapor was speaking to staff of the VRA and the Electricity Company of Ghana during a familiarisation visit to their head offices in Accra last Friday.
Demand for power
The Energy and Green Transition Minister stated that the government, together with the VRA, would deliberate on how the state utility institution could acquire more power plants to meet the country's growing energy demands.
He said that energy demand was projected to surge to around 8,000 megawatts by 2040, necessitating a strategic approach to power generation.
“Demand is increasing and demand is projected to hit about 8,000 by 2040, thereabouts. Are we going to bring IPPs to fill that 4,000-megawatt gap? Are we going to pass all that cost onto the consumer? We certainly cannot do that. I've done the numbers.
“I want us to adopt a paradigm shift, where we put VRA at the fore, provide VRA with the necessary support, and ensure that VRA acquires more power plants for the nation, but at an affordable, competitive, transparent price,” he said.
However, he indicated that the sector had experienced some significant progress as there have been some negotiations with some IPPs that would result in saving money for the state.
“So far, what the IPP renegotiating team has done tells me that we are saving about $300 million from the IPPs. The previous administration did their bit. We've also come to improve on it, and that is what we ought to be doing,” he said.
Budget
Mr Abdulai Jinapor said this year's budget allotted $28 billion to the sector, not for investments, but to pay for the energy sector shortfalls accrued over the years.
He said if nothing changed for the better in the country’s energy sector, this amount could surge further next year.
“If it continues like that, next year will be $35 billion. If we don't stop it, what it means is eventually, energy sector shortfalls alone will consume the whole budget, and it's not sustainable.
So, I've been working with the team aggressively to turn around that unfortunate scenario,” he stated.
Dedication
The Chief Executive Officer of VRA, Edward Ekow Obeng-Kenzo, said the organisation, as a strategy going forward, would ensure the generation of reliable power at an affordable price for Ghanaians to ensure the economy of this country progressed as expected.
He said the staff of VRA were dedicated to ensure that the machines were always on to generate the power and keep the light on.
Mr Obeng-Kenzo added that their maintenance programmes and all activities were geared towards ensuring that VRA produced not only reliable electricity, but one that was also affordable for the country.
He appealed to the minister to continue to support the VRA increase its portfolio as the demand of the country increased, so that we at least about 75 to 85 per cent of the export capacity of this country continue to support the economy of the country.
