Volta River Project (Report) (Hansard, 27 July 1956)

§ Mr. Lennox-Boyd

The Report of the Preparatory Commission on the Volta River Project will be published on 27th July in the Gold Coast and in the United Kingdom as a non-Parliamentary publication. The Commission was set up in 1953, by the United Kingdom and Gold Coast Governments in accordance with a 1952 White Paper (Cmd. 8702). The Report consists of three volumes—the main document, a volume of appendices dealing with special features, and the Engineering Report of the Consulting Engineers. I will arrange for copies to be placed in the Library.

The Report provides evidence of an extremely thorough examination of all the problems, including health and human factors, to be overcome in a project of this magnitude, and Her Majesty's Government greatly appreciate the work done by the Preparatory Commission, by the Consulting Engineers and by the other experts in various fields who assisted them.

The main conclusions of the Commission are that the project can be regarded as technically sound and could be carried out successfully; that it is not capable of significant improvement from an economic point of view but that the greatest return from the project would be derived by achieving maximum production as soon as possible. The Commission further concludes that the project should be competitive in relation to other schemes, provided that:—

(a) it was completed according to the time-table of construction:
(b) a sound policy was adopted in the employment and provision of living conditions for the labour force;
(c) economic stability in the Gold Coast was maintained;
(d) the aluminium companies were satisfied that the internal cost of operating the smelter would be acceptable.

The Report also deals with factors such as the co-ordination of the future development plans of the Gold Coast Government, the maintenance of adequate administrative and technical services, the climate for investment in the Gold Coast, the level of future world demand for aluminium and future developments in the generation of power from nuclear energy.

As a result of its investigations, the Commission considers that the scheme, based on two stages of aluminium production, would cost £184.9 million (with capacity of 120,000 tons per annum) rising to a total of £231.3 million (with capacity of 210,000 tons per annum). These estimates are calculated on prices ruling at 30th September, 1955, and include capitalisation of interest accruing during the construction period at a rate

Aluminium Production	…	120,000 tons	210,000 tons
		£m.	£m.
Dam and Power Installation	…		64.0		67.6
Smelter and Mines	…		57.9		91.2
Gold Coast Public Works:
Railways	…	16.6		18.1
Other Direct Commitments	…	2.8		5.0
Other possible Investments arising from Project	…	4.2		10.0
Allied Development Expenditure	…	39.4		39.4
			63.0		72.5
TOTAL	…		184.9		231.3

Notes:

(a) Estimates are based on prices ruling at 30th September, 1955; they do not include an allowance for a 40 per cent. to 50 per cent. increase in costs during the period of construction.

(b) interest rate is taken at 5 per cent.

(d) Allied Development Expenditure includes provision for certain public works which the Gold Coast Government have already decided to undertake for the general benefit of the country.

The United Kingdom and Gold Coast Governments and the Aluminium Companies have each re-affirmed their interest in the project though none of them is yet committed to participating in it. The parties have agreed that because of the substantial increase in the estimated capital cost of the project, it will be necessary to review both the framework

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of 5 per cent. The estimates cover not only increased capital costs but also certain additional work which had not been provided for in 1952 when the cost of these stages of production was estimated at £114 million and £144 million.

The Commission has emphasised that its basic policy was to analyse "every aspect of the Volta River Project on a very conservative basis." Having surveyed several other big schemes in various parts of the world which have been undertaken in recent years, and having studied the largest construction jobs carried out in the Gold Coast over the past decade, the Commission has recommended that it would be prudent to allow for an increase of the order of 40 per cent. to 50 per cent. in the present estimates of the power project, railways and smelter so as to obtain a realistic appreciation of the finances that might be needed for the project, which would take about eight years to bring into production. The Commission says that this increase should not make the project less attractive assuming world prices moved upwards at roughly the same rate.

The following table shows the present estimated cost of the project together with the cost of power:

and the method of finance. As the next step, the International Bank is being invited to make a general assessment of the project and to indicate the extent to which it would be willing, in principle, to participate in it if agreement on the framework could be reached between the two Governments and the Aluminium Companies.