The Ghanaian government has agreed to pay Nigeria a $170 million gas debt by February 2016 in a bid to avert a recent threat by a consortium of Nigerian companies to cut gas supply to Ghana over unpaid gas bill.
Ghana receives gas from Nigeria through the $1 billion West African Gas Pipeline (WAGP), which transports Nigerian gas to the Republic of Benin, Togo and Ghana for power generation and other domestic uses.
N-Gas, which is jointly owned by Shell, Chevron and the Nigerian National Petroleum Corporation (NNPC), buys gas from oil companies in Nigeria and transports it to its customers in Benin, Togo and Ghana through the pipeline operated by the West African Gas Pipeline Company (WAGPCo).
Nigeria had threatened to cut gas supply to Ghana over $181 million the country owed N-Gas but after protracted negotiations by a strong Ghanaian delegation that came to Nigeria, a part payment was made and the country given the February 2016 deadline to settle the outstanding debt.
Reuters quoted a spokesman of Ghana's Ministry of Power Kweku Sersah as saying in a statement yesterday that Ghana's state power generating company, the Volta River Authority (VRA), would settle the debt to N-Gas in three tranches starting in November, adding that the terms were still being finalised."The high-powered delegation that went ... (to the Nigerian capital Abuja) was able to negotiate for Nigeria Gas (N-Gas) to continue to supply the country the needed gas," Sersah said in a statement posted on the ministry's Facebook page.
VRA buys the gas to fire Ghana's power plants mainly in the east of the country. Hydro supplies around 50 per cent of Ghana's power with the rest from its own gas and other sources. Ghana's government has promised to end crippling power blackouts by the end of the year.
Ghana gets around 25 per cent of its power through gas from Nigeria. The threat by N-Gas to reduce supplies by 70 per cent would have made it harder to achieve the government's goal of tackling blackouts and could have raised the cost of supply.
President John Mahama had explained that the $103 million debt owed the Nigerian company by Ghana had existed since 2012. According to him, Ghana began piling up the debt after a ship broke part of the pipelines that convey gas from Nigeria to Ghana through the West Africa Pipeline.
Mahama said Ghanaians must understand the circumstances that created the financial impasse. "The debt dates back to 2012. We started incurring the debt when a ship broke one of the pipelines that supplied the gas from Nigeria, so the VRA had to purchase crude to power the machines for almost a year, and that affected their balance sheet a lot.
"So when the pipe was fixed and the gas started flowing, it had already frustrated the accounts of the VRA but currently, there is a plan in place to pay the debt and already, July and August have been sorted out," the President told Kumasi-based Garden City Radio. The West African Gas pipeline starts from Itoki area of Ogun State and goes through Agido near Badagry in Lagos, passing through 33 Nigerian communities before it goes offshore.
The space allocated to N-Gas in the pipeline could transport up to 200 million standard cubic per day of gas. Shareholders in WAGPCo include Chevron, Shell, NNPC, Ghana's Volta River Authority (VRA), BenGaz and Soto Gaz.