Government’s payment of US$738 million to the Volta River Authority (VRA) through the ESLA bond issue and other strategic actions such as increasing power sales to the export market and the shift to natural gas usage has drastically driven down the company’s debt levels and placed it on the path of sustained growth, according its board chairman, Kweku Andoh Awotwi.
From a severely impaired financial position in 2016, a three-year financial recovery plan (FRP) rolled out by the Volta River Authority (VRA) has narrowed its net losses by 49percent, from GH¢430.5million in the previous year to GH¢220 million in 2018.
This figure is a further decline from the GH¢1.3billion debt that was inherited by the current leadership of the state power producer back in 2016, representing a combined 83percent reduction in the company’s net losses over the last two years.
Counting on the steady growth, the company anticipates to break even by close of year 2019 and even start paying dividend hopefully by 2021.
Addressing the 9th annual stakeholders meeting of the VRA in Accra, Mr. Awotwi attributed the impressive turnaround of the company to the successful implementation of its financial recovery plan as well as the support from government and other stakeholders.
“As at 2016, VRA was incurring losses over GH¢1.3 billion to be precise; today, 2018 year-end, we have narrowed those loses by over 80percent to GH¢200million. This year, 2019, we expect to narrow them even further and break even.
“The successful implementation of the financial recovery plan has been hinged on our success in cost control, prosecuting new commercial opportunities, improving internal business processes as well as enhancing the efficiency of our thermal operations,” he told journalists in an interview.
The VRA board chairman added: “We acknowledge the government and all our stakeholders for their support of the Authority’s operations. The progress in implementing the FRP would not have been possible without it.”
Mr. Awotwi indicated that company is going through some restructuring towards becoming a viable and profit-making entity by focusing strongly on its core business and privatising its non-core functions and investments.
“We are looking at a new VRA which is underpinned by financial sustainability; a profit-making entity. We want private sector partners for all our subsidiaries to take care of the non-core areas of the business and that will make us more focused on the electricity business.
We are also using technology to run the business in a more efficient manner; we are in a competitive market, IPPs are coming but VRA is still the market leader, commanding 60percent of the country’s electricity demand but we must do that reliably and cost-effectively.”
VRA’s group revenue from the sale of electricity in 2018 increased by 6.6percent to GH¢3.2billion over the previous year’s sale of GH¢3billion, due mainly to the combined effects of a marginal increase in the volume of energy sold and upward adjustment in tariffs in the regulated market.
Despite the impressive turnaround, the operations of the VRA is constrained by ongoing challenges in the energy sector, in particular the issue with non-favourable tariffs.
Mr. Awotwi indicated: “The issue of non-reflective tariffs and inadequate liquidity continue to affect our finances. It is our expectation that government will address these critical issues through its on-going initiatives.
We also expect the relevant institutions to work to ensure stability in the exchange rate regime to ease our cost of doing business.”