VRA in US$665m crude oil dilemma

The Volta River Authority (VRA) needs US$665 million to enable it generate power up to the end of the year.

The Director of Engineering of the Ghana Grid Company, (GRIDCo), Norbert Anku, said the VRA will therefore need the assistance of government to purchase the crude oil it requires if the Authority is to meet energy demands.

He explained that the money will be needed to procure 19 cargoes of crude oil to power the thermal plants that VRA operates.

He said the generation of the 3,945gigawatts thermal complementation would require approximately 19 cargoes of crude oil. With each cargo containing 405,000 barrels and the price of fuel estimated at US$87 per barrel including incidental charges, the total amount required per cargo is approximately US$35 million.

“Hence for the total 19 cargoes required for 2010 an amount of about US$665 million would be needed by VRA to meet their thermal generation target for 2010.”

Already VRA’s inability to purchase light crude oil to run the Tema Thermal Station One, about 30 megawatts of electric power had to be shed earlier this year.

Mr. Anku said the estimates made by GRIDCo indicate that about 10,305 gigawatts of power will be consumed this year, of which 6,360 gigawatts is to be produced from hydro and the remaining from thermal generators.

“Considering the current low levels of tariff and the precarious financial conditions of the utilities, some financial support from the government will be required to ensure energy security for 2010,” he said.

Mr. Anku said the Public Utilities and Regulatory Commission (PURC) could also help to save the government purse by ensuring that tariffs charged by the utilities are raised to their real economic levels to enable the companies generate enough revenue to run their operations.

Currently, the utility companies have laid a proposal before the PURC for a 150 percent increase in tariffs charged on consumers; a proposal consumers - especially the Association of Ghana Industries - have kicked against claiming the increment will kill domestic manufacturing industries.

“Whenever VRA is not able to secure the required financing to purchase the required quantity of fuel, or if for any reason the delivery of fuel is delayed, there will be supply deficit and some load will have to be shed,” he said.

Source: B&FT