Business News of Sun, 26 Feb 201713
Listing GRIDCO, VRA on stock exchange ‘bad idea’ – Casely-Hayford
Financial Analyst Sydney Casely Hayford has shot down an idea by the Akufo-Addo government to list the Ghana Grid company (GRIDCo) and the Volta River Authority (VRA) on the Ghana stock exchange in coming days.
“I think it’s a bad idea,” Casely-Hayford argued.
The President, Nana Addo Dankwa Akufo-Addo during the State of the Nation Address in Parliament on Tuesday lamented that he inherited a $2.4 billion highly indebted power sector from the previous government.
He further disclosed that his government is considering moves of listing the GRIDCo and VRA on the stock exchange, a revelation that has been met with varied opinions.
“…We have begun to develop a national electricity master plan which will also explore the benefits of listing VRA and GRIDCO on the stock exchange,” he added.
But speaking on Citi FM’s news analysis programme, The Big Issue on Saturday, Casely-Hayford said the move will give the private sector too much influence in the affairs of the nation’s energy sector.
“I really think it’s a bad idea because you are going to give private sector the opportunity to shut you down. Private sector will not accept that their tariffs are capped and it’s an unprofitable cap. If it is going to worked at it has to be calculated in a such a way that the cap will make them profitable and that they will achieve profitability from cost savings and not from raising the cap. So the minute you give them the restriction of making loses…they will shut the system down and walk away,” he explained.
“As we speak, government owes VRA plenty money. VRA owes GRIDCo. GRIDco is owed by ECG. The public does not owe ECG; they have been paying their tariffs without fail except that in this instance government is subsidizing the tariff in order to be able to carry on what it considers to be an affordable rate for the public to pay.”
In a related development some analysts in the energy sector have cautioned of long term costs to government should it rush through the process to list the VRA and GRIDCo on the stock exchange.
Though they contend of the benefits in restructuring the operations of the institutions, the analysts fear of a potential dip of the policy should government fail to undertake due diligence.
“This is the way to solve the inefficiencies in the country’s energy sector. We should not rush into it; there is a lot that has to be done which is why we need to undertake some market intelligence and even the timing must be taken into consideration and that is very important if you want to generate a lot of market interest,” the Co-Chair of the Ghana Extractive Industries Transparency Initiative (GHEITI), Dr. Steve Manteaw said in an interview.