Nigeria gives Ghana February ultimatum for N33.8bn debt

Nigerian gas company, N-Gas, the main supplier of gas to Ghana’s Volta River Authority through the West African Gas Pipeline, has given the VRA up to the end of February 2016 to clear its outstanding debt of $171.5m (N33.79bn).

Gas Plant

The N-Gas buys gas from oil companies in Nigeria and transport the commodity to its customers in Benin, Togo and Ghana through the $1bn WAGP, which is operated by the West African Gas Pipeline Company.

The N-Gas had recently said it would cut gas supply by 70 per cent to Ghana’s main power generation company by Friday, October 16, 2015 due to unpaid debts of $181m.

The VRA was said to have paid $9.5m last Friday out of the $181m debt for gas supplied from August 2014 to this month.

Sources close to the team that met the N-Gas officials last week to negotiate the payment terms told The Finder that the $171.5m was to be paid in three tranches from now to the end of February 2016, according to GhanaWeb.

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The sources, however, declined to give the breakdown of the payment dates and how much would be paid for each tranche.

The debt covers gas supplied to the VRA and the cost of supply and transportation of the commodity from Nigeria to Ghana.

It was reported that as of July this year, the VRA owed banks to the tune of over $1.3bn, and that it would be very difficult for the company to secure a loan from any bank in Ghana to pay its debt to N-Gas.

This means the Government of Ghana, which is the 100 per cent owner of the VRA, will have to look for money to bail out the firm in order to ensure that the N-Gas does not cut gas supply to the country.

The N-Gas had deferred a plan to slash gas exports to Ghana beginning last Friday over the unpaid debt, compelling the country to pay $9.5m and ask for time to come up with the rest.

The VRA received gas and pipeline-related transport services totalling $231m, but paid only $50m, with an outstanding balance of $181m. It, therefore, owes WAPCo $103m.

Ghana gets about 25 per cent of its power supply through gas from Nigeria, which flows through the pipeline via Benin and Togo, and the threat by the N-Gas to reduce volumes by 70 per cent would have raised the cost of supply.

The N-Gas is jointly owned by Shell Petroleum Development Company, Chevron Nigeria Limited and the Nigerian National Petroleum Corporation.

The International Project Agreement signed in May 2003 by WAPCo and the governments of Benin, Ghana, Nigeria and Togo, with the secretariat of the Economic Community of West African States as witness, provides that the N-Gas be allocated a space in the pipeline that can transport up to 200 million standard cubic feet of gas per day.

Ghana has a deal with Nigeria to receive a contractual 120 million standard cubic feet of gas daily.

Femi Asu with agency report