Nigeria pays $10m to Ghana over failure to meet gas supply agreement

WAGPCo13 April 2014, Abuja – The Federal Government has paid $10 million to Ghana as compensation for Nigeria’s failure to meet the gas supply agreement it entered with latter.

Under the agreement signed in 1999,  Nigeria was required to supply Ghana with 123 Million Metric British Thermal Units (MMBtu) per day.

However, Nigeria was said to have failed to meet the target, supplying only 30 MMBtu/d and less sometimes.
The Director of Planning and Business Development of the Volta River Authority (VRA), Kofi Ellis, told TV3’s Sandra Amarquaye weekend that Ghana has been paid $10 million as damages by Nigeria over the shortfall as stipulated in the gas supply contract.

“The contract already stipulates some liquidated damages for reduction in supply,” Ghanaweb quoted Ellis to have said.
“I know that already we have been paid some damages for the reduction in supply”, he added.

A recent visit of the Minister of Energy and Petroleum, Emmanuel Armah-Kofi Buah, to Nigeria culminated in West Africa’s biggest gas-supply nation promising to supply a constant 50 MMBtu/d.

Ellis noted that intervention by government, admitting that inasmuch as Nigeria would want to help Ghana, they are also facing challenges.

“I guess the Nigerians also share in our problems. They understand. The unfortunate thing is that this is a commodity that both countries need for themselves. So it is a matter of trying to see how best you can help your neighbor”, he said.

He however said the contract will not be abrogated notwithstanding that Nigeria is facing challenges in meeting the terms.

The recent below-expectation supply of gas from Nigeria has been cited as one of the causes of challenges in the energy sector.
Power shortage has been on the rise in Ghana as hopes to solve its electricity woes by producing

natural gas to power electricity plants had been held back by the loss of a shipment of materials and delays in paying contractors.
The Nigerian National Petroleum Corporation (NNPC) and Ghana National Petroleum Corporation in 1999 signed a gas supply agreement to further implement the West African Gas Pipeline project.
Under the agreement, Ghana would be conserving between 15,000 barrels per day (bpd) of crude oil and 20, 000 bpd of crude oil by taking gas from Nigeria to run its power plants. Ghana would be taking 84 per cent of about 120 mm cfpd of gas that Nigeria would be selling to the other three countries, Ghana, Benin, Togo under the project.
Aimed at boosting Nigeria’s revenue and protecting environment by reducing gas flaring, the West African Gas Pipeline Project was among the first major projects President Olusegun Obasanjo administration launched at its inauguration on May 29, 1999.
Recently, Ghana had approached Nigeria press for supply of more gas for power generation. Following a recent meeting with its energy and petroleum minister to Nigeria, Nigeria agreed to increase its gas sales to Ghana from 30 million to 50 million cubic feet per day, which was below the 123 million cubic feet per day contained in the gas supply agreement by the two countries.

– Chika Amanze-Nwachuku, This Day

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