Ghana Agrees to Pay Nigeria $170m Gas Debt by February

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.