A Review of the Nigerian Energy Industry

Ghana indicts Nigeria for breach of gas supply contract

West African Gas Pipeline Co.19 November 2014, News Wires – Ghana, yesterday, accused Nigeria of breaching the agreement between both countries to supply gas to Ghana, a situation that has worsened the country’s power supply.

Mr. Edward Bawa, Communications Consultant at Ghana’s Energy Ministry told a Ghanaian news medium that since the inception of the West African Gas Pipeline Project, Nigeria, which is responsible for supplying Ghana, Togo and Benin with natural gas, has proven to be unreliable.

“Since gas started flowing through the West African Gas Pipeline, Nigeria has demonstrated that they can’t be relied upon to give us gas,” he maintained. According to him, Nigeria was supposed to send 123 million cubic feet of gas to Ghana but was only able to supply around 49 cubic feet, saying the quantity is “woefully inadequate to enable us to power our generating plants.”

Bawa called for an increase in the sanctions to be meted out to Nigeria for breaching the contractual agreement, noting that only this will serve to deter Nigeria from continually breaching the terms of the contract.

He said, “The penalty, for the entire contractual period, if Nigeria fails to meet the supply requirement is $20 million dollars. That is peanut to them so they do not have incentive to supply Ghana the required quantities of gas, especially when they have other thermal plants that are asking for gas. Simply they are just not respecting the contract.”

To this end, Ghana’s load shedding exercise took a worsening turn as the Ghana Grid Company, (GRIDCO) says it will have to reduce power supply to consumers further if Nigeria’s gas supply to the country continues to dwindle.

However, Bawa disclosed that the country is currently looking for alternatives to gas supply from Nigeria, as the Volta River Authority (VRA) is talking with other suppliers who will over the period see how they can give gas to Ghana, as the country awaits its own gas.He urged electricity consumers in the country to be patient with the power firms, saying that it will take a while to solve the electricity problem.

To address the challenges facing the country, the Volta River Authority (VRA), has projected that about $1.5 billion is needed to improve the country’s power generation and put an end to the power crisis the country is facing.

Mr Samuel Fletcher, Head of Corporate Communications, VRA, told the news medium that while there are currently investments in the sector, those investments should have started several years ago.“Today various stakeholders, various partners including governments are helping us invest in a number of projects for the future, which will come to fruition in about two years’ time,” he said.

Fletcher lamented that investments in the power sector should have been done more 20 years ago. Continuing, he said, “Kwame Nkrumah had a vision that is so wonderful. We needed only 10 per cent of Akosombo’s capacity at that time as a country. We needed 60 megawatts; he built 600 megawatts.”He explained that one megawatt of power generated costs about one million dollars, adding that with a deficit of about 500 megawatts, the country needs about $500 million to fix it.

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