18 March 2014

Ghana: Nigeria Ditches Ghana

Ghana has an option to invoke provisions in the contract agreement with the West African Gas Pipeline Authority for its inability to live up to contractual terms to deliver gas to Ghana.

But the country stands at a disadvantaged position, and is possibly gone begging Nigeria for the Gas, considering the urgent need for the commodity.

Ghana's Minister of Energy, Emmanuel Kofi Buah and the Chief Executive Officer of the Volta River Authority, ING Kirk Kofie, are currently in Nigeria to broker terms for the timely release of the agreed gas from that country.

But a former Chief Executive Officer of VRA, Dr. Charles Wereko-Brobby, who signed the contract agreements with the suppliers, is pointing at a breach of contract, for which authorities of Ghana must demand answers.

"VRA and the government of Ghana should use whatever muscle it can muster to ensure that N-Gas delivered that which it had signed on to and delivers it consistently," Dr. Wereko-Brobbey told Joy FM.

Industry experts who spoke to The Chronicle on the issue said Ghana cannot afford to flex its muscles in the circumstance. "We do have a contract alright but this is a commodity we need, without gas from Nigeria our situation will be worse than this.

"The truth is that if we threaten Nigeria with a suit they would stop giving us the gas. They need it themselves and they squeeze to give us, especially as we don't have our own gas. Although we can invoke terms of the contract, I don't think it is necessary," an industry person told The Chronicle

The West African Gas Pipeline Company has, for some time now, limited its supply to Ghana to between 30 and 70 million cubic feet, which is way below the contractual volume of 120 million standard cubic feet required to supply to the country.

The Corporate Communications Manager for the Volta River Authority, Mr. Samuel Fletcher confirmed to The Chronicle that per the agreement with Nigeria, "we are supposed to receive 12O million standard cubic feet of gas and what we receive is less than that."

Ghana has, on several occasions, been thrown into a quagmire of energy supply, mainly due to the inability of the West African Gas Pipeline Authority to deliver gas for powering the Asogli and VRA plants.

Currently, the power distributor, the Electricity Company of Ghana is drawing up a planned power shedding programme due to generation shortfalls resulting from lack of gas from Nigeria to power its generating plants.

There are, however, no indications when the problem would be solved to restore constant power to industries and homes.

The West African Gas Pipeline, on 28 August 2012 completely shut down, truncating supplies to Ghana, Togo and Benin, when a ship caused major damages to the pipelines. The repair works on the damaged lines was completed in October 2012, but gas deliveries to Ghana resumed in July 2013.

Currently, Ghana is experiencing a further generation shortfall of about 270 megawatts due to the shutdown of Asogli power plant and the Mines Reserve Plant. Ghana has 1,650 megawatts of power capacity with a projected peak demand of 1,985megawatts.

Effectively, Ghanaians are headed for another excruciating load management programme, which is yet to be regularized by the Electricity of Ghana.

"We are still in talks with our partners within the power sector and we will be able to firm up on the quantities, which we need to offload at each period of the time.

"Once we have that we will come out with a programme by the beginning to the middle of next week. It will be on our website, call centres and widely circulated," Director of Operations at ECG, Tetteh Okine announced earlier.

Economic and social implications

Another load shedding exercise will be the last straw that will break the back of the many companies in the country. Some of the companies had, in the past year, folded up due to increased taxes, utility tariffs and an erratic power supply, which increased production cost.

Many manufacturing companies had had to lay off majority of its workers as a result. Armed robbery cases increased posing security issues for most people in the country due to the constant blackouts, especially at night.

But facts are that Nigeria itself is facing supply challenges and it is unclear how it would be able to meet Ghana's demands for the commodity.

Meanwhile, Ghana's own gas project hangs as none of its numerous completion timelines had ever been met.

The Ghana Gas Company has once again given an April, 2014 deadline to start delivering its first gas from the jubilee field. Skeptics, however, say the company is likely to miss this deadline as the Chinese loan on which the project depends remains out of our reach.

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