The West Africa Gas Pipeline Company (WAPCo) has said it is ready to resume transportation of some 30 million standard cubic feet per day of gas to the Volta River Authority, although it expects the latter to fully settle US$50 million out of its US$162 million debt as soon as possible.
In June 2016, WAPCo and the gas supplier – N-Gas – curtailed supply to Ghana due to the lingering debt.
But a July 12, 2016, meeting in Abuja, of the committee of ministers of the four countries in the pipeline deal agreed that the VRA pays US$50million in 60days, whilst gas supply is restored in 60 days, beginning with 30MMscfd and 60MMscfd by the end of the year.
This means the US$50million should have been settled by September 12, 2016 whilst efforts are made for the balance to be settled in due course.
The CEO of WAPCo, Walter Prerez, however, told a follow-up meeting of the energy ministers of Ghana, Togo, Benin and Nigeria in Accra yesterday, that VRA has paid US$20million of the agreed amount, leaving a payment balance of US$30million.
“There remains an outstanding balance of US$162 million, of which US$98million is owed WAPCo,” Walter Perez said.
“Our cash position continues to deteriorate due to the ongoing payment default by VRA,” he said.
In a reaction, VRA’s CEO, Kirk Koffie, told the B&FT at the meeting that plans are underway for another US$10million of the US$50million to be paid by next week, and that the VRA and the government of Ghana are committed to settling the debt in full.
The financial challenges at the distribution end of power, he said, has meant that the Sunon Asogli thermal company, which consumes most of the gas from Nigeria, owes the VRA in excess of US$250million.
But Ghana has concerns
Opening the meeting, Ghana’s Petroleum Minister, Emmanuel Armah Kofi Buah, who is the new Chairman of the Committee of Ministers, expressed concern over the occasional vandalism of the pipeline in Nigeria’s Delta Belt, which has often led to curtailment of supply to Benin, Togo and Ghana.
He suggested that the accumulated debt is “largely the result of the inability of WAPCo to transport the expected gas volumes to VRA’s power plants for power generation.”
The pipeline damage and repair efforts between 2012 and 2013, the minister said, compelled the VRA to switch to “extremely expensive alternative fuel,” which made it tougher for it to settle its debts.
Ghana’s apprehension lies in the fact that, the debt notwithstanding, there is no guarantee that N-Gas and WAPCo will supply the 133MMscfd contractual volumes, which has hardly ever been supplied since the pipeline was completed in 2011.
The Petroleum Minister said the proverbial “chicken and egg situation” of whether the debt has to be settled first or supply has to be guaranteed first “ought to be put behind us for a lasting solution to be sought as soon as possible.”
Whilst the power situation in the country has improved due to rising water levels in the Akosombo Dam and the coming on stream of the Karpowership, among others, the solely gas reliant Sunon Asogli plant (200MW) needs the gas from Nigeria to produce.
Efforts to inter-connect the West Africa Gas Pipeline and the Ghana Gas pipeline to enable Ghana’s own gas to be transported to Tema does not seem possible immediately as preliminary discussions on tariffs and other fine details are yet to be concluded.
The Committee of Ministers meeting was attended by energy ministers of the four countries, ECOWAS representatives, the West Africa Pipeline Authority, and other stakeholders.