Valco Saga: As Ghana Loses US$30.4 Million Annually

“Government allowing Valco to rip off Ghanaian Poor.” This was the headline of a letter which was published in the Ghanaian Voice (6th-8th May 2002).

Valco consumes a whopping 40 per cent of the power produced in Ghana, while all other businesses and consumers consume only 60 per cent. Where is the Justice in giving Valco another 2-year grace period while the poor man making minimum wage is made to subsidise this American giant? Are we so mesmerized by the foreigner that w allow him to cheat us in our own country?... The letter ended with the question. “Wouldn't increasing the tariffs for Valco reduce the percentage increase for the poor man making less than $1 per day?”

Probably it was in response to this letter that the Ghana Palaver in its November 22-November 25, 2002 edition screamed the following heading “Ghana Loses US$30.4 million per annum…” As NPP rejects NDC renegotiated Valco Agreement. The paper revealed that in the last days of the NDC Government, the then Minister of Energy submitted to Parliament a concluded Agreement negotiated between the Ghana Government negotiating Team and Valco-an agreement which had taken two years to conclude. Among the issues negotiated were tariffs for electric power consumed by Valco. The negotiated tariffs, had they been approved by Parliament, would have taken effect from January, 2000.

If the NDC Government Negotiating Team's Proposal had been accepted by the NPP Government, the minimum tariff that Valco would have paid VRA for 2146 Gwhr would have been 19.75 US mills instead of the then existing 15 US mills per Kwhr.

Based on the proposed Agreement, the maximum tariff for 216 Gwhr energy would have been 29.15 mills per Kwhr.

But the NPP, which had then won the elections and were preparing to take over the reigns of Government, refused to allow the negotiated Agreement to be tabled and discussed in Parliament, alleging the possibility of impropriety.

Can assuming power, the NPP Government set up a new Government Negotiating Team under the Chairmanship of Mr B.J. Da Rocha, an eminent lawyer and a former National Chairman of the NPP, who, amidst wide publicity and in the glare of television cameras, promised the country that his team would negotiate a better deal and that VALCO would be made to pay economic tariffs or be sent packing out of the country. But da Rocha led negotiating team could not achieve anything.

Another interesting aspect of the NDC's Agreement with VALCO was that for the first time VALCO even accepted to pay tariff based on mix of hydro and thermal power. By the NPP Government's decision not to accept the NDC negotiated Agreement, the VRA was forced to lose a minimum of US$10.2 million and a maximum of US$30.4 million annually. Worth noting is also the fact that these losses could have been more if VALCO were to consume power over and above 2146 Gwhr.

Now VALCO has gone. It's mass workers have joined the labour market. VRA has lost its major source of foreign exchange to pay for its external loans. That must be borne by the poor cocoa farmer.