Valco said to back gas pipeline

ACCRA, Oct 10 (Reuters) - The Volta Aluminium Company (Valco) in Ghana is ready to buy substantial quantities of gas from the West African Gas Pipeline project once it is completed, a source at Valco told Reuters.

``We want to be a foundation customer and we're very interested in the project. We can guarantee long-term purchase of power,'' said the source, who declined to be named.

Valco's interest will be a boost to the stakeholders in the $400 million project, who are due to take a decision by the end of the year on whether to go ahead.

The pipeline will take gas from Nigeria to its fellow West African states of Benin and Togo as well as Ghana.

Royal Dutch/Shell Chevron and the state oil companies of the countries involved are partners. Chevron is also the managing sponsor.

Currently, it costs Valco $150,000 per day to buy 40 percent of the power generated by the Akosombo hydroelectric dam, 100 km (60 miles) northeast of the Ghanaian capital, Accra, and the main source of electric power in the country.

It pays a further $15,000 a day for other fuel purchases.

A paralysing energy shortage in 1998 caused by drought pushed Valco and other industries to explore alternative power sources.

``We can't rely on hydroelectricity for all our energy needs, that is quite clear right now,'' the Valco source said.

Only four of Valco's five potlines are in operation because of inadequate power supply. Valco's smelter plant, which is more than 30 years old, is the second largest in Africa.

Valco is 90 percent owned by U.S. Kaiser Aluminium with Reynolds having the balance of 10 percent.