WAGP halts Ghana gas supplies

28 June 2016, Week 25, Issue 645

The West African Gas Pipeline Co. (WAPCo) has suspended gas flows from Nigeria to Ghana over unpaid bills, marking the first time the link has been closed for this reason, the company said last week.

Ghana’s state power producer Volta River Authority (VRA) owes Nigeria’s N-Gas around US$185 million. N-Gas, in turn, owes WAPCo US$109 million, WAPCo said.

WAPCo is the public-private partnership that owns and operates the West African Gas Pipeline (WAGP). It brings together companies from Nigeria, Benin, Togo and Ghana, including a Chevron unit with a 36.9% stake. 

Talks were held in 2015 between Nigeria and Ghana on finding a resolution to the gas supply and payment issues but none has yet been forthcoming.

Since August 2014, VRA has received natural gas and pipeline-related transportation services, totalling US$231 million through the WAGP, WAPCo’s managing director, Walter Perez, said last week. “As of today, VRA has paid only US$46 million of this amount. Of the outstanding balance of US$185 million, VRA owes US$109 million to WAPCo with the balance being owed to the other parties in the gas supply chain,” the statement said. 

The company went on to say it had talked to the VRA, the Ghana Public Utilities and Regulatory Commission (PURC), the relevant ministries and “even the highest level of the government to find a solution to this situation before it reached crisis level,” Perez added. “Unfortunately, these efforts have not achieved the desired result.”

As a result, N-Gas has told WAPCo that one of its major suppliers, Nigerian National Petroleum Corp. (NNPC), would curtail gas supply, he said.  

Although the WAGP pipeline carries only a small portion of Ghana’s energy needs, the suspension of supplies will exacerbate power supply problems in the country at a time when low water levels have already dented hydropower output. 

Ghana’s government, which is under pressure to keep voters happy during what will be a closely contested general election scheduled for November, will have to rely on a range of oil products to take up the slack in terms of power generation. Plans are also under way for a floating storage and regasification unit (FSRU), the Golar Tundra, to be deployed in Tema.