Peter Owu *
ould the VRA have prevented the energy crisis of 1994 and its attendant problems of power curtailment and customer discomfort? There are some who think so, including Dr. Charles Wereko-Brobby, a former Energy Policy Advisor to the defunct PNDC Government of Ghana, and a leading member of the opposition. Contributing to a discussion on "The Current Energy Crisis: Planning for the Future" at the Institute of Economic Affairs in Accra, Dr. Wereko-Brobby expressed the view that the lack of adequate planning was not a factor leading to the crisis.
"For me, planning is not the problem, for we did conceive of some very fine plans and programs," he says. "The problem for us to face squarely is why we in this country almost always fail to implement the plans that are drawn in times of crisis, and resort to yet more planning when the same crises turn up because of our failure to act the first time round."
The Role of VALCO
He goes on to observe that following the 1983-84 drought, Ghana's need to complement its hydro-generation base with thermal capacity was "overwhelmingly self-evident." The decision that had to be made, he notes, was not whether to build, but at what capacity and over what period of time. According to Dr. Wereko-Brobby, the major driving force for addressing "this seemingly basic question" was the future role of the Volta Aluminum Company (VALCO) in Ghana. In addition, he states, there was the question of whether the country could explore and utilize its indigenous gas resources to fuel the proposed thermal power plant. "That we are in a pickle today," he says, "is a direct consequence of the failure to come to grips with these two issues in a professional manner."
For Dr. Wereko-Brobby, the failure to build a thermal power plant earlier was the result of "basic errors of policy judgment." He feels that the outcome of GNPC's study of the viability of Ghana's gas resources should not have delayed construction of the thermal plant. "The harsh fact is that even if the early tests had shown that we had promising reserves of gas, the task of establishing commercial production facilities would have taken at least 4-6 years to complete. Given the harsh experience of the earlier drought it seemed that the project was sacrificed on the altar of wishful dreaming and complacency once the waters of the lake began to fill up again."
The former energy consultant now turned politician also points to the VALCO factor as another cause of the "dilly-dallying." Noting that the Akosombo dam could not have been built but for the creation of VALCO—the smelter is estimated to consume 45% of Ghana's entire power production—Dr. Wereko-Brobby says it was always anticipated that VALCO's level of power usage would have to be reviewed as the country's own domestic demand increased. According to him the basic issue was that if VALCO exercised its option to stay on in Ghana after the expiration of the original master agreement in 1997, the country would need a substantially large thermal generation capacity to meet the rapidly expanding domestic demand. But if VALCO decided to leave, there would be no point in building a 300 or 400 MW plant. "I cannot see how, important though this consideration is, we still did not press ahead with the decision to build the modest complement to address a future drought problem while we took our time to unravel the complexities of VALCO staying or going." Incidentally, VALCO recently announced that it would stay on after 1997.
Responding to these concerns, VRA's Chief Executive, Erasmus Alexander Kalitsi, admits that the thermal project was delayed. "There is no doubt we're late," he says. But while the decision to delay thermal implementation was taken before he assumed office, Kalitsi says he understands the hesitation of his predecessors. The major consideration, he notes, appears to have been the impact of thermal costs on local tariffs. "We had to be cautious in forcing these additional costs on the country." This was particularly relevant since VALCO had indicated that it was not interested in helping to finance thermal technology. "We had to think in terms of thermal being paid for by non-VALCO customers. In other words, the only way the costs could be recovered would be by imposing higher tariffs on domestic customers."
Obviously, the imposition of higher tariffs involved political decisions which were largely beyond VRA's control. As Kalitsi explains, for a major scheme like the thermal project, VRA needed to build consensus among all the interested parties.
"These approvals had to come from the Government of Ghana and the Ghanaian public who would have to pay the additional tariffs. In addition, we had to get the consent of each and every one of the financing agencies." Mr. Kalitsi explains, "In the process of trying to get clearance from all the interested parties to whom we were trying to sell this project, they would come out with various queries each of which would send us into additional studies in order to justify the package being presented."
Some of these questions, according to Kalitsi, related to the sizing of the plant, its location, and the proposed solutions to environmental problems that it would create. Obviously, these are all technical issues for which different people are bound to have different solutions. "We had to demonstrate to every interested party that their solutions could not compete successfully against our proposals." VRA's focus, Kalitsi notes, was always on the least-cost solution, one that would not exert undue pressure on final tariffs.
The VALCO factor too, should not be discounted, says Kalitsi. The Ghana Generation Planning Study of 1985 recommended a thermal plant be built in 1989. Kalitsi points out that if the VRA had gone ahead with the thermal project and VALCO had decided to pull out after 1997, the company would have been left with a large block of power for which there was no immediate need. Nevertheless, Kalitsi agrees that VRA should have gone ahead and taken the risk, especially given the drought experience of 1983.
But Kalitsi does not agree with Wereko-Brobby's assertion that the thermal project was delayed because VRA was waiting for the results of GNPC's viability studies on natural gas. "We went ahead with our plans to set up the Takoradi plant in the hope that we would be able to pipe gas to feed the plant. But so far it appears the amount of gas found is not sufficient to justify the cost of a pipeline from the gas source to Takoradi." Nevertheless, Ghana's natural gas is still considered a potential source of fuel for the thermal plant.
<columKalitsi is confident about the Authority's future. At the same time, he is aware that the pressures on VRA will be greater if Ghana's economy attains a targeted growth rate of 8%. He points out that the Authority prepares 10-year projections annually which are revised in the light of the various studies being undertaken by the utility. "We always have a stack of potential projects to meet the growing load," he says, "and we're always looking for the least cost solution."
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* Peter Owu is a freelance journalist and ATF Correspondent in Ghana.