Nigerian gas company has given Ghana’s Volta River Authority up to the end of February 2016 to clear its outstanding debt of $171.5m.
The N-Gas buys gas from oil companies in Nigeria and transport the commodity to its customers in Benin, Togo and Ghana through the $1bn WAGP, which is operated by the West African Gas Pipeline Company.
N-Gas is chief supplier of the product to VRA.
The decision not to immediate action of curtailing gas supply to Ghana, Accra-based Joy FM reports, was taken after the country paid the $10 million – roughly 10 per cent – of its debt to N-Gas.
Although negotiations were not public, it was learnt that a few of the key issues discussed included the fact that Ghana is one of the biggest customers of WAPCO for gas supply because of its strategic role in the West African sub region in the supply of electricity.
Nigeria Gas’ (N-Gaz) threat of cutting the gas – reducing volumes by 70% – would have raised the cost of supply. The debt covers gas supplied to the VRA and the cost of supply and transportation of the commodity from Nigeria to Ghana. Gas supply to Ghana from Nigeria was expected to be cut by 70% due to the Volta River Authority’s (VRA) indebtedness to the two companies to the tune of 181 million dollars. It, therefore, owes WAPCo $103m. The WAPCo had threatened to cut gas supply to Ghana Friday dawn over 180 million dollar debt owed NGAs, but it suspended the decision after the deadline for payment elapsed last night.
VRA halted its financial assistance in August 2014, and – at present – Ghana is partaking in an global Monetary Fund programme to restore its fiscal balance. The problems being faced have the potential to stem from budgetary stress; to fund the payments, Ghana had been borrowing money from numerous banks at high interest rates.
NGAs is owned by the Nigeria National Petroleum Corporation and other multinational oil companies including Chevron and Shell. The global Project Agreement signed in May 2003 by WAPCo and the governments of Benin, Ghana, Nigeria and Togo, with the secretariat of the Economic Community of West African States as witness, provides that the N-Gas be allocated a space in the pipeline that can transport up to 200 million standard cubic feet of gas per day.
