05 JULY 2013www.spyghana.com
World Bank advises Ghana to shut down VALCO
Edited by : AL CIRCLE
2 min read
The World Bank has said that in the current context of load-shedding, it would be economically prudent decision for Government of Ghana to shut down the Volta Aluminum Company (VALCO), the state-owned aluminium smelter, and provide the power to other consumer segments that pay tariffs closer to the true cost of supply.
In the bank’s estimation, VALCO’s continued operation has a “high economic cost” for the country and Government should stop the “hidden” power subsidy it gives VALCO, which harms the viability of power sector utilities.
If, on the other hand, Government decides to keep VALCO, electricity consumers should not be expected to bear the additional cost-burden of the VALCO subsidy, the bank said in a new energy sector report.
Dr. Kwabena Donkor, Chairman of Ghana's Parliamentary Select Committee on Mines and Energy, has however opposed the proposal, citing that some 600 people risk losing their jobs if VALCO is shut down.
VALCO, he said, provides raw materials for Aluworks and other industries, and closing down the company will affect those other businesses.
“If we close VALCO down, we will be decreasing our manufacturing base — which is already very low. If anything at all, we should be looking at increasing our manufacturing base.”
The World Bank report argues, “VALCO has failed to pay VRA and GRIDCo in full, and has significant payment arrears with them.” VALCO, according to the report, cannot be viable if it pays the full cost of electricity supply.
“The total subsidy from the low power tariff is estimated to be around US$150million per year,” the World Bank stated.
In the bank’s estimation, VALCO’s continued operation has a “high economic cost” for the country and Government should stop the “hidden” power subsidy it gives VALCO, which harms the viability of power sector utilities.
If, on the other hand, Government decides to keep VALCO, electricity consumers should not be expected to bear the additional cost-burden of the VALCO subsidy, the bank said in a new energy sector report.
Dr. Kwabena Donkor, Chairman of Ghana's Parliamentary Select Committee on Mines and Energy, has however opposed the proposal, citing that some 600 people risk losing their jobs if VALCO is shut down.
VALCO, he said, provides raw materials for Aluworks and other industries, and closing down the company will affect those other businesses.
“If we close VALCO down, we will be decreasing our manufacturing base — which is already very low. If anything at all, we should be looking at increasing our manufacturing base.”
The World Bank report argues, “VALCO has failed to pay VRA and GRIDCo in full, and has significant payment arrears with them.” VALCO, according to the report, cannot be viable if it pays the full cost of electricity supply.
“The total subsidy from the low power tariff is estimated to be around US$150million per year,” the World Bank stated.
Previous article
Zacks downgrades Reliance Steel & Aluminum to “Underperform” rating
Next articleOrmet unsecured creditors get better deal under new settlement
Grow with
AL Circle
