VRA States Position On VALCO

The Chief Executive of Volta River Authority (VRA), Kweku A. Awotwi, says the Authority expects there will be additional electricity capacity to increase its supply of power to Volta Aluminium Company (VALCO) from the current 70 megawatts (MW) to 140 MW at the end of this year, 2011.

He explained that VRA’s power-generation system currently does not have the capacity to supply additional power of 70 MW to VALCO to enable it to operate a second pot line.

“Today, the system is in a fine balance, and any attempt to increase supply of power to VALCO is likely to create instability, leading to possible power trips system-wide. The reason that the system cannot provide additional power today is twofold: first, that forecast capacity for 2011 is unavailable, and in particular, the Takoradi steam unit has gone on repairs after a system-side trip late last year; and second, that the demand for power by Ghanaians has sharply shot up. There is basically no surplus”.

Mr. Awotwi said it is not true the impression being created that VRA is not willing to provide VALCO with the much needed additional power. “The idea of re-starting VALCO as a prelude to developing an integrated aluminium project in the long-term is laudable. To successfully achieve it, however, requires a dispassionate evaluation of the costs and benefits of achieving those goals. What are the cost and benefits of these efforts? Do the benefits pay for, and outweigh the costs? And who pays for these costs on the way to enjoying the promised benefits?”

Challenges

Providing some statistics to support the claim Mr. Awotwi stated: “Ghana Grid Company (GRIDCo) projected a 2011 peak demand for power at 1,589 MW, a level typically reached during November/December. However, peak demand in 2011 has already hit 1660 MW, just five months into the year. At this rate of growth, you can imagine what the demand will be by the end of the year.”

He also stated that supporting VALCO’s current power needs reduced the amount of reserve capacity available to the system, required to provide back-up capacity and maintain system reliability anytime there was a contingency – whether for unexpected power outages or for scheduled maintenance.

Mr. Awotwi, who was speaking to B&FT in an interview, said “Until VRA starts operating its steam unit to produce an additional 100 MW, and increases Takoradi’s current power generation from 200 to 300 MW, it will be difficult to meet VALCO’s additional demand in 2011”.

He pointed out a few important outcomes of operating VALCO at the current time. First, the Authority was forced to cut back on exports of power to neighbouring countries such as Togo and Benin, and would lose between US$10-$15 million per potline of VALCO operation.

Second, the VRA was being forced to operate its high cost diesel-powered plants during peak periods, at a cost – of 30 US c/kWh – of several multiples of the tariff being received from VALCO. These factors combined to weaken VRA’s financial position, and VRA hoped that it would be compensated properly for these losses by the Government of Ghana and/or VALCO.

Supply Plan

VRA has a number of projects in the supply pipeline, Mr. Awotwi revealed. This plan includes the completion of another plant at Aboadze to add 132 MW to existing capacity by the end of 2011, and the relocation of the two 110 MW generating units to the Western Region – to be ready by 2013/2014, using gas from Ghana’s gas fields.

VALCO Operation

VALCO since its re-activation almost four months ago has been operating at 20 percent capacity and it is currently producing 3,000 metric tonnes of foundry ingots per month for local and international markets.

Officials of the aluminium smelter say the business can only be sustainable given its huge overheads, if it gets additional supply of power to operate a second potline.

Consequently, VALCO wants VRA to increase its power supply to enable it to operate a second potline which will increase its production from 3,000 metric tonnes to more than 6,000 metric tonnes by middle of the year.

VALCO was established by the late Dr. Kwame Nkrumah, Ghana’a first President with the aim of creating an integrated aluminium project creating a value chain comprising bauxite, aluminium smelter, and a refinery.

Source: B&FT