Gas cut: Ghana battles with economic, political fallout

29 June 2016, Sweetcrude, Lagos – Ghana is currently battling with the economic and political fallout of the recent gas supply cut by the Nigerian National Petroleum Corporation, NNPC.

West Africa gas pipeline

West Africa gas pipeline

Nigeria suspended the flow of natural gas to Ghana over unpaid bills, totalling about $181 million.

There are indications that the development may lead to a political crisis even as lack of gas for power generation has worsened an already bad electricity supply.

Nigerian gas flows to Ghana through the West African Gas Pipeline Company’s pipe that runs via Benin and Togo. Ghana’s state-owned Volta River Authority, VRA, buys the gas to fire power plants mainly in the east of the country.
News outlets in Ghana reported that VRA owes N-Gas, which in turn is in arrears to the West African Pipeline Company, the operator of the conduit that transports gas from Nigeria to Benin, Togo and onwards to Ghana.

The latter’s arrears have been building since October 2015, and the Ghanaian government subsequently missed its February 2016 payment deadline.

Power cuts have raised the cost of doing business and angered voters at a sensitive time for President John Mahama’s government ahead of what is expected to be a tough re-election battle next year.

Mahama has vowed to end the power cuts by the start of next year and the minister for power has said he would resign if the problem has not been fixed by then.

The government’s room for manoeuvre is limited, however, under the terms of an aid programme with the International Monetary Fund it is following to restore balance to its economy.

Ghana was for years one of Africa’s economic stars but falling global commodity prices have blunted the value of its gold, cocoa and oil exports.

To address the gas supply cut by Nigerian, a delegation from the Ghanaian Power Ministry is expected in Abuja to negotiate a way out with the NNPC.

“They will be sending another delegation to Nigeria. We are praying that they are able to negotiate so that this matter can be resolved to the benefit of both parties,” a spokesman for the Power Ministry was quoted as saying.

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