By Friday Nwosu
Nigeria has halted its gas supply to three West African countries following the onslaught of attacks on oil installations on the Niger Delta by militant groups in the region.
The country was unable to supply gas to countries like Ghana, Togo and the Republic of Benin which has been affected by the attacks in the Delta region.
According to a report by New Telegraph, the volume of natural gas exported to Ghana in March 2016 crashed to the lowest in the last one year. Nigeria pumped 570 million standard cubic feet (or 18MMscf/d) produced in March into the West African Gas Pipeline (WAGP), a facility through which gas is transported to Ghana, Togo and Republic of Benin.
This, according to a WAGP document seen by New Telegraph, followed a consistent pattern of a five month continuous drop, which started last November, when production plunged from 2.01 billion standard cubic feet (or 65MMscf/d) in October 2015 to 1.27Bscf (42MMscf/d) last November. Since then, it had been on a downward trajectory.
Nigeria and Ghana had earlier locked horns over the N34 billion ($170 million) debts by the latter whose government had, on October 20, 2015, said it would pay Nigeria’s N-Gaz the debts.
This new supply cut was caused by the assault on gas facilities in the Niger Delta, this newspaper learnt. Ghana’s state power generating company, the Volta River Authority (VRA), said that it would settle the debt in three tranches starting in November, Kweku Sersah, a spokesman for Ghana’s Ministry of Power, said. Power supplies are no longer at risk, he added.
“The high-powered delegation that went … (to the Nigerian capital Abuja) was able to negotiate for Nigeria Gas (N-Gaz) to continue to supply the country the needed gas,” Sersah said in a statement posted on the ministry’s Facebook page. Ghana gets about 25 per cent of its power from Nigerian gas, and N-Gaz’s threat to cut supply by 70 per cent would have made it harder to achieve that country’s goal of ending power outages this year and could have raised supply costs.
Ghana will clear a backlog of arrears, which stretches back to 2012 and has also committed to pay in full for gas received between now and next February, the Nigerian National Petroleum Corporation (NNPC) said in a statement last October. “The highlight of the agreement is that the total sum of gas supply debt will be cleared by February 2016 at the latest,” the NNPC said in a statement.
However, it is unclear how VRA will generate the extra revenue to pay off the debt given the shortfall in payments from the state Electricity Company of Ghana, which does not generate enough revenue to cover the costs of its payments to VRA. Experts say that is because energy tariffs are too low, residents find ways to skip payments illegally or pay too little and government itself is behind in its payments to the electricity company.
VRA’s payments to N-Gaz fell in August 2014, according to the WAGPCo and, before that, it borrowed money from Ghanaian banks to pay for purchases, creating debt it struggles to finance, one energy expert said. In the long term, Ghana aims to solve the problem by greatly increasing its domestic gas production, but for now, government finances are under extra scrutiny due to an International Monetary Fund (IMF) programme to restore fiscal stability.
The issue is sensitive in the run-up to Ghana’s election next year that is expected to be closely fought. Power cuts have angered voters and come on top of a sharp slowdown in the economy, which for years was one of Africa’s strongest. N-Gaz is a joint venture company that delivers gas through WAGPCo to Ghana and owned by the Nigerian National Petroleum Corporation, Shell and Chevron.