GOOD NEWS: Ghana To Enjoy Low Gas Tariffs?

Minister of Petroleum, Emmanuel Kofi Buah

By Lawrence Segbefia

The West African Gas Pipeline Company (WAPCo) has agreed to a possible tariff review in the future with the government of Ghana to enable reliable gas supply.

The Minister of Petroleum, Emmanuel Armah-Kofi Buah recently criticized WAPCo for its unrelenting stands on charging Ghana high tariff before it supplies gas for power generation.

Mr. Buah also urged WAPCo to be innovative in its operations and not rely on high tariffs.

Speaking to Citi Business News, the Managing Director of WAPCo, Walter Perez hinted of a possible tariff review in the landing component of gas after 2018 when the current contract ends.

According to him, the agreement with the government of Ghana to supply gas to the Volta River Authority (VRA) will expire at the close of 2018 to pave way for the renegotiation of the tariff.

“We are prepared to look at the tariff, we do this every five years I think the current tariff expires at the end of 2018, between the West African Gas Pipeline Authority and WAPCo, we will be looking at how to establish new tariff going forward,” he assured.

Pointing out the need to adopt new measures in designing the tariff regime, Mr. Perez maintained that the business of energy and power in the sub-region is fast changing, hence requires dynamic steps to address pertinent issues related to the industry.

“Make no doubt about it, business is changing so we have a set of foundation contract which we have established with the VRA on how to establish tariff going forward,” he stressed.

He disclosed that WAPCo is already engaging the VRA and the Ministry of Petroleum to design different tariff system.

“Going forward, there are other contracts in the works and I think it will call for different way and approach in tariff for the pipeline, it is work in progress. We recognize that the tariff period in which we are expires in 2018 and we need to start working now to be ready when it’s over. We will find a solution, I don’t see tariff being an impediment to doing business,” he said.

Ghana’s debt to WAPCo.

The government of Ghana owes WAPCo and N-Gas in excess of 162 million dollars

The Petroleum Ministry has promised to pay 30 million dollars by close of the year after paying 20 million dollars.

At a conference in Accra recently, Mr. Perez warned that the company will take drastic action against the government of Ghana if it fails to pay the debt by end of the year.

In sharp rebuttal Mr. Buah also cautioned that WAPCo’s actions could generate adverse reactions from other parties which may not auger well for the company in the long run.

According to him, the company’s decision is not economically viable since the VRA will need the gas to operate before it can pay the debt.

He pointed out that, although WAPCo seems to be monopolistic in the industry, there is a limit to the powers of the company over the players in the value chain.

Editorial

PLEASE STOP THE DRIFT

There is no doubt that the Mahama administration has managed to end the many months of power outages which nearly collapsed industry and brought the country to a standstill.

Now Ghana’s installed capacity is far more than the national requirement and experts say it will take a while for the problem to recur.

However the cost of electricity has been rising steadily over the years as a direct result of a switch from reliance on hydro generation to thermal generation of power.

The Insight draws attention to the fact that the availability of power is no more or less important than the reduction of cost of power.

Indeed Governments have the responsibility to ensure that power is available and at affordable cost.

The drift to reliance on expensive thermal generation needs to be halted as quickly as possible in favour of the search for cheaper energy sources.

This is a challenge which must be taken seriously by the people and Government of Ghana.