Gov’t agrees payment plan with WAPCO….as power crisis deteriorates

Ghana’s Petroleum Minister, Emmanuel Armah-Kofi Buah has confirmed that government has agreed on a ‘Master Payment Plan’ with the West African Gas Pipeline Company (WAPCO).  The agreement is in a bid to restore gas supply to the country’s electricity generation companies.

The comments of the country’s chief energy policymaker comes after WAPCO announced that it has for the first time cut gas supply via the West Africa Gas Pipeline to the country. To be restored when a resolution on Ghana’s indebtedness to the sub-regional gas company is reached.

Mr. Armah-Kofi Buah said, following the agreement on the Master Payment Plan, the government has paid US$30million to WAPCO. This is to defray part of the reported US$180 million debt accrued from unpaid gas bills.

He explained: “We had an issue of debt with WAPCO. We have met  and agreed a payment plan with the committee of ministers and a payment has been made. The initial payment was US$50million. We have already paid US$30million and we will make more payments.The issue is not payment. There is no issue with WAPCO, they were with us in the meeting in Abuja.” This he told to B&FT on the sidelines of the supplementary budget estimates presented to Parliament.

“What I know is we have a challenge and we are dealing with it. We are doing everything to ensure that the power plant that are stranded in the Tema enclave because they use only gas, unless we do a pipeline from the West to the East or unless the pipeline comes from Nigeria”.

It has emerged that the West African Gas Pipeline Company has suspended gas flow to Ghana over unpaid bills by government.

The Volta River Authority (VRA) reportedly owes Nigeria’s NGas around US$180 million, while NGas in turn owes WAPCO US$104 million dollars, the spokesperson of WAPCO, Harriet Wrekko-Brobbey has said.

In 2015, about 20.6 million MMBtu of natural gas was imported from Nigeria at an average delivery price of US$8.75 per MMBtu through the West Africa Gas Pipeline for electricity generation. This year the Energy Commission estimates the natural gas flow from Nigeria to remain unchanged.

Currently, Ghana is experiencing a severe erratic power supply challenges that on a daily basis has left many business and homes without electricity for at least 12 hours, a situation the President, John Mahama has attributed to militant disturbances on pipelines in Nigeria resulting in erratic flow of gas from WAGP at a time inflows from Ghana’s own Atuabo gas plant is going through operational challenges.

However, the Energy Commission has reported that inadequate gas supply from Nigeria through the WAGP could not only be due to capacity challenges in Nigeria but finance as well.

The Energy Commission says the VRA has been indebted to N-Gas of Nigeria for gas supplied exceeding three months and over $100 million as at the end of 2015. Besides, debt accrued by beginning of this year till early March, 2016 is over $100 million. Ghana also owed neighbouring Ivory Coast for power imports as at the end of last year.

On the domestic side, VRA owes Ghana Gas Company for gas supplied from Atuabo, also in the tune exceeding $100 million as at the end of 2015. Ghana Gas in turn could not pay GNPC- the current national gas aggregator- because of the debt chain, considering that the aggregator is also currently experiencing revenue shortfalls due to the prevailing low prices of crude exports.

Presently, the electricity supply challenges, which has last for about four years have brought to the fore the issue of generating power from renewable sources to augment thermal and hydro power.

The VRA however believes that renewable energy sources will not be enough if the country is to meet its energy demand.

Current electricity demand for the country currently stands at about 2,225MW. This is growing by 10 percent per annum and is expected to hit 7,000MW by 2030.

Given the current gas demand of about 450mscf per day, indigenous gas and limited supply from the West Africa Gas Pipeline are unable to meet demand. Available indigenous gas is also expected to run out by 2036.

The China-Africa Development Fund (CADFund), therefore, is to providing an about-US$1.5billion long-term loan for construction of two 350MW coal-fired plants for the VRA.