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VRA looks to banks to pay off gas debt

VRA looks to banks to pay off gas debt

The Volta River Authority (VRA) says it is putting together a consortium of banks in the country to help it to settle its indebtedness of about US$182million to Nigerian gas suppliers – N-Gas and the West African Gas Pipeline Company (WAPCo).

While in a frantic search for a means to pay off the outstanding debt, the power generator says it is now paying its monthly bills, and is trying to close off the piling up of more debt.

“We paid our bill for July; we are preparing to pay our bill for August. There is an outstanding bill for which we have a special team and arrangement to cater for. We are putting some banks together to try to get us funds to pay off that debt,” Kofi Ellis, Business Development Manager of the VRA told the B&FT.

“What has changed is that VRA has begun to pay what they consume on a monthly basis but there is still no reduction of the overall debt,” WAPCo’s CEO, Walter Perez, confirmed to the B&FT.

“They are paying for what they use every month but the debt must be paid down for us to remain a viable commercial entity,” Mr Perez said.

“We have to recover the cost of the investment in the pipeline. Clearly when you have as much money at stake as we have it is going to be difficult for us to continue to make further investments necessary to meet the growing energy needs here in Ghana.”

Managing cash flow from the distribution end of the power value chain has been very challenging for the ECG; the power off-taker is often unable to pay the VRA timeously for generated power, which in turn makes it difficult for the latter to pay gas suppliers.

The VRA is reported to be equally indebted to the Ghana Gas Company to the tune of over US$130million.

“Definitely we need to pay attention to how we manage the flow of receivables from electricity,” Kofi Ellis said.“ECG is recently doing quite well in trying to cut off anybody who is not paying. It is all geared towards increasing revenue at the end of the line so that all of us behind ECG can get money to cater for some of these things.”

What tariffs levels should apply have been another sticking point in the power sector; while power entities keep asking for more, consumers have often scuffed at the suggestion, asking for stability in supply first.

The ECG is currently asking for more than a 100percent increment in tariffs, from 16pesewas per unit to 35pesewas while the Volta River Authority (VRA) has tabled before the Public Utilities Regulatory Commission a proposal for an increase from 15pesewas to 30pesewas per unit.

Power Minister, DrKwabenaDonkor supports the idea that power tariffs need to go up to enable entities in the sector to remain viable.

We at the helm of affairs in the power sector have recognized that underlying the historic under investment in generation, transmission and distribution has been the unattractive tariff regime,” the minister told investors at the Ghana edition of the Powering Africa Summit in Accra recently.

“Let me assure investors in the sector, both local and foreign, that the tariff question is being addressed and that the Ghanaian state will not shy away from taking the tough decisions that need to be taken”, Dr. Donkor

Source: http://thebftonline.com/commodities/oil-gas/15441/VRA-looks-to-banks-to-pay-off-gas-debt.html#sthash.SoSDZE4L.dpuf

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Reporting Oil and Gas project was launched on 4th June 2009atTakoradi, Western Region, Ghana by Penplusbytes (PPB – www.penplusbytes.org) with the vision of providing a one stop online information and knowledge about Ghana’s oil and gas sector
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