Mr. Speaker, I will convey this to my lawyer.
Mr. Speaker, the point was also made that VALCO was very much part of the problem. That, Mr. Speaker, is not true because on average, the VALCO which incidentally is now owned ninety per cent by the people of Ghana as against the VALCO which used to exist and was hundred per cent owned by foreigners, was drawing an average of 140 megawatts at a time when the total system consumption was 1,400 megawatts. Therefore, they
were using only about 10 per cent.
I have specifically asked the engineers at VRA that if VALCO had not operated at all what effect would it have had on the crisis. And the answer is that it could have delayed the crisis by about one month or one and a half months. What it means, therefore, is that this argument about VALCO being the cause is not really true.
Mr. Speaker, the point has also been made by my hon. Colleagues on the other side that when they came they added 550 megawatts to the generation system and that we have not added anything. They have said that they left a plan which said we should add 100 megawatts every year. But let us look a little bit at the figures.
It is true that they built the 550 megawatts in Aboadze. But the truth of the matter is that even while they were in office and when that plant which essentially was to complement the hydro sources such that the depletion from the hydro sources could reduce, they were unable to do that. In the year 1999, for instance, when they were capable of generating about 2,500 gigawatts hours from TAPCO they generated only 755 gigawatts hours.
Mr. Speaker, in 1999, remember, they
generated 5,169 gigawatts hours from the hydro sources as against the 4,800 gigawatts hours. The question that comes to mind is that since they had the thermal complementation, why were they not using it so that they could have used less of the water at the hydro sources?
Again, Mr. Speaker, in the year 2000, when they could have generated 2,500 gigawatt hours, they generated only 345 gigawatt hours. Since we have been in power we also have not been able to use
Incidentally, Mr. Speaker, when we
generate from Akosombo, it is about US 1.5 cents. When we generate at Takoradi it is about 14 cents. We sell electricity in this country at about 10 cents. So you see the difficulty that arises when we generate at 14 cents and we have to sell at 10 cents, which explains why they were unable to use it and why we also have not been able to use it.
The point that I want to make is that they had the plant and the 550 megawatts that they introduced. They themselves never used it because it was too expensive for them. Since we have been in power, we have not been able to use it because it is too expensive for us. And they say, “Go and put up another one”. No, we rather found out that the only way we could have electricity in this country which is affordable is to get gas because when we use gas, the price would go down substantially.
We therefore did not look for cheap, soft solutions. We decided to go for a solution which would be sustainable and that one was to invest in the West African Gas Pipeline which hopefully would be able to bring gas to this country by the end of the year and will bring the cost of generation in this country to a level that can be afforded by industry and domestic
Mr. Speaker, I want to assure you this would be my last point. The point has also been made about TICO. TICO is part of the 550 megawatts plant in Aboadze. The first one they called TAPCO. It is 330 megawatts and it is fully owned by VRA. Then there is TICO which is about 90 per cent owned by an American company and 10 per cent owned by VRA. That they went for a private investor was an excellent idea which I personally applaud. But there have been so many problems with the TICO.
The Agreement that brought TICO into existence said that they were to add another 110 megawatts to it. Somehow, the point is being made that why have we, the NPP not insisted on TICO adding the 110 megawatts? The simple answer is that under the original agreement it was the CMS, the foreign investor that was supposed to go and look for the money to do that investment.
After all, they own it 90 per cent. Somehow they insisted that the loan for the additional 110 megawatts should be guaranteed by the Government of Ghana even though we have 10 per cent. Obviously, that did not make sense. And if we refused to guarantee, it was because we were confident that even if we brought any such agreement to this House it would be thrown away. They own the plant 90 per cent. When they want to go for a loan they say, “Come and give a sovereign guarantee”.
When a private company, Lever Brothers is going for a loan do they ask the Government of Ghana to come and provide a sovereign guarantee?
Mr. Speaker, another interesting point is that the TICO agreement itself was a very funny agreement. It was an agreement
which demanded very, very high capacity charges. The capacity charges, I do not have a personal problem with them but they were based on a ridiculous 20 per cent rate of return. What it means in practice is that whether they generate for us or not, we needed to pay the capacity charges which was based on 20 per cent. That means that even if they do not generate, within five years we should have paid them the whole investment, and that is exactly what they have done.
After five, six years, having recovered all that they have invested they still continued to own the assets 90 per cent. And what did we hear a couple of weeks ago? They have now decided to sell them. So even though they did not generate and offer the people of Ghana the electricity that they wanted, under the capacity charges they have been fully paid.
Twenty (20) per cent rate of returns means that after five years, we would have had the pay back. They have done that. After a year or two they say, “we have now sold the thing out and we are going”.
Again, Mr. Speaker, remember that this TICO after 1½ years of operation left a debt of $17.9 million, almost $18 million that VRA was supposed to pay to them in respect of these capacity charges. So there is no point rushing into agreements that would end up creating problems for the Republic of Ghana.
Mr. Speaker, faced with a similar problem just before the National Democratic Congress (NDC) left office but this time in the petroleum sector, they decided not to increase the price, not to do anything but to offer subsidies. The end result was that in the year 2000 when this country earned only $5 million as tax revenues, the Government of the day gave
subsidies amounting to $400 million.
We earned $5 million; petroleum subsidies -- $400 million. And because they did not have that $400 million, the $500 million having been used for salaries and other important expenses, they were forced to borrow the entire $400 million from the banking sector. Mr. Speaker, this was at a time when the total primary capital of the banking sector in Ghana was only $200 million.