We won’t shut down VALCO - Minister

The Minister for Energy and Petroleum, Emmanuel Armah Kofi Buah, has kicked against suggestions by the World Bank that the Volta Aluminum Company (VALCO) be shut down.

The World Bank’s position has been that VALCO’s continued operation has a “high economic cost” for the country in view of a “hidden” power subsidy Government gives the company, thereby harming the viability of power sector utilities.

“In the current context of load-shedding, it would be far more economic for Government to shut down VALCO and provide the power to other consumer segments that pay tariffs closer to the true cost of supply. This would still be true if all the VALCO staff remained on full salary during the shutdown,” the bank said in a report launched last week.

At a meeting with the press last Thursday, however, the Energy Minister said: “The World Bank says ‘stop and forget about VALCO and just continue forever importing your raw materials’. We say ‘no’. We also know that when you add value (to products) in your country, it is good.”

The minister added in a passionate tone, “Yes, we have challenges; but we are going to work very hard until we find the solutions and create industries in our country. That is the only way to create jobs. So we know what we are doing...”

In its report, the bank said the total subsidy for VALCO’s low power tariff is estimated to be around US$150million per year.

“Not only does VALCO pay an extremely low tariff, but even so VALCO has failed to pay VRA and GRIDCo in full and has significant payment arrears with them,” the bank said.

Aside from the Energy Minister, the chairman of the Parliamentary Select Committee on Mines and Energy, Dr. Kwabena Donkor, has also rejected the World Bank’s position, saying instead of shutting down companies the country should rather think about creating more.

“If we close VALCO down, we are decreasing our manufacturing base -- which is already very low. If anything at all, we should be looking at increasing our manufacturing base. Without VALCO, there would have been no Akosombo to start with. VALCO was the off-taker that secured funding for the Akosombo Dam,” the MP told the B&FT at the launch of the World Bank report.

VALCO is a heavily power-dependent smelter. The World Bank estimates that the company alone gobbles up about 6% of all power generated in the country, even as it currently operates only one of its five pot-lines.

Mines take up 14%, while residential and commercial consumers draw on 70%. The remaining 10% is shared between exports and other bulk-users, according to World Bank calculations.