General News Tue, 20 May 2003

Govt, VALCO To Talk About Power Supplies

A team from Kaiser Aluminium, the US-based aluminium giant, is expected by the end of this week for talks on their operations in Ghana, the Minister of Energy, Dr. Paa Kwesi Nduom announced on Monday.

"I wish to inform the public that we are expecting a team from Kaiser to arrive in Ghana at the end of this week to engage in discussions that we hope will help us find a way to improve the relationship between VALCO (Volta Aluminium Company) and VRA (Volta River Authority)," he said.

He was speaking at a press conference in Accra during, which he announced that the government had set up a committee to review workers' agitation at VRA.

Kaiser Aluminium, the largest shareholder of 90 per cent in VALCO, said early this month that it had stopped operating its remaining pot line with effective from May 5, 2003. VALCO said it decided to initiate the curtailment to provide VRA with additional flexibility in meeting the needs of other power users in Ghana in the light of the low level of water in the Akosombo Dam. A statement from the company said by this, VALCO would preserve its right to power later in the year when the level of the Dam rises.

VALCO said it expected this curtailment to extend through to the end of the rainy season, at which time it would resume operations by using the remainder of its 2003 power allocation including the power that it would have consumed in the absence of the present curtailment. It said VALCO was still evaluating the financial impact of the curtailment including potential charges and cash requirement for affected employees.

"The net cash impact of such curtailment is expected to be offset, in part, by a reduction in working capital, excluding special items, and the impact of the additional curtailment on ongoing operating income is expected to be modest."

It said VALCO would continue to pursue a dual-track approach to the power situation. The primary track is through arbitration under the auspices of the International Chamber of Commerce in Paris with both the VRA and the Government of Ghana, concerning past curtailments and the volume and price of power available to VALCO under existing long-term contracts.

The second track is direct negotiation with the VRA and the Government of Ghana to find a mutually beneficial solution short of arbitration. VALCO has five pot lines, each with a capacity to produce 40,000 metric tons of primary aluminium annually. Although VALCO has a long-term power contract with VRA the number of operating pot lines varies from year to year depending on the power allocation.

In 2000, 2001 and into early 2002, VALCO had operated four pot lines. In March 2002 VALCO responded to VRA allocation cuts by reducing its operating level to three pot lines. It further reduced its operating pot lines to two and then one after December 2002.

Source: GNA
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