The Africa Sustainable Power Centre (ASEC), a number one vitality think-tank, has issued a stark warning to authorities in regards to the potential dangers of merging Volta River Authority (VRA) and Bui Energy Authority’s (BPA) property.
ASEC described the transfer as pointless and probably catastrophic for the nation’s vitality sector. “The merger of VRA and BPA and separation of VRA’s thermal energy will usher-in the collapse of Ghana’s vitality safety. For years, VRA has managed a sturdy vitality portfolio that features photo voltaic, thermal and hydropower, and dismantling this rigorously balanced construction would jeopardise the nation’s energy stability,” the think-tank mentioned in an announcement.
The warning follows rising opposition to a draft invoice proposing the merger of VRA and BPA, consolidation of the Northern Electrical energy Distribution Firm (NEDCo), and institution of an unbiased Thermal Energy Authority that subsumes VRA’s thermal crops.
ASEC argued that VRA’s confirmed observe document, together with a revenue of GH₵156million in 2020, demonstrates the establishment’s capability to handle its property with out intervention.
“There isn’t any want to repair what will not be damaged,” ASEC mentioned, cautioning that hydropower property, by nature, are inclined to function as a monopoly – and consolidating these beneath a single entity might stifle competitors and innovation.
The think-tank additionally highlighted Bui’s contributions to the nation’s renewable vitality targets by means of its floating photo voltaic mission, noting that each VRA and BPA have performed essential roles in assembly the nation’s goal of 10 perecnt renewable vitality integration by 2030.
Along with the potential disruption of renewable vitality targets, ASEC contended that authorities’s plan to privatise VRA’s thermal property might destabilise one of many nation’s key energy producers.
“VRA has performed the function of a ‘social powerhouse’, performing as a buffer towards sharp electrical energy worth hikes 0 particularly from Unbiased Energy Producers (IPPs),” ASEC acknowledged.
They warned that privatising VRA’s thermal property would expose customers to cost will increase pushed by market forces.
ASEC additional argued that privatisation ought to solely be thought of when a public entity constantly underperforms, which isn’t the case with VRA. Eradicating thermal property from VRA’s portfolio, they famous, would severely compromise its potential to make sure a dependable vitality provide, as thermal energy helps stabilise VRA’s income streams.
The think-tank additionally pointed to liquidity challenges that would come up, given the continued fee points with the Electrical energy Firm of Ghana (ECG) and state-owned smelting firm, VALCO, which profit from below-market electrical energy costs.
Furthermore, ASEC criticised the proposed merger of ECG and NEDCo – each loss-making entities, arguing it will complicate efforts to show a revenue. As a substitute, ASEC advisable partial privatisation of ECG’s operations to deal with inefficiencies and lift income for combatting the electrical energy sector’s monetary difficulties.
Equally, the Institute for Power Safety (IES) has additionally thrown its help behind VRA workers opposing the merger, describing their considerations as “legitimate and significant” for Ghana’s vitality future.
In an announcement, IES Govt Director Nana Amoasi VII outlined a number of key points, together with VRA’s long-term monetary stability and the necessity for diversified energy technology sources. “Privatising VRA’s thermal property would threat weakening the establishment’s potential to help vitality safety,” Nana Amoasi mentioned.
IES additionally warned towards undermining VRA’s function in supporting NEDCo, which offers electrical energy to underserved areas, stressing that any disruption to this help might have far-reaching social and financial penalties.
IES echoed considerations over VRA’s liquidity, highlighting the Money Waterfall Mechanism (CWM) and non-payment by ECG and VALCO as ongoing challenges.
The assertion additionally pointed at excellent authorities debt to unbiased energy producers (IPPs), cautioning that the creation of a separate Thermal Energy Authority might additional burden the state financially.
In gentle of those points, IES known as for in depth stakeholder engagement, retaining VRA’s management over its thermal property and addressing the nation’s vitality sector debt. The institute additional advisable that authorities conduct a radical influence evaluation of the proposed merger, encourage competitors within the distribution sector and strengthen current establishments.
“The proposed energy sector restructuring poses extra dangers than advantages,” IES mentioned, urging authorities to rethink the merger and give attention to stabilising and enhancing Ghana’s vitality infrastructure.