BusinessOil & Gas/Mining

WAPCo cuts supply to GNPC over US$13 million mounting debt

The decision, which took effect from July 1, comes after a series of negotiations between the two entities over debt arrears, although the GNPC paid US $1.246 million to WAPCo last week

The West African Gas Pipeline Company Limited (WAPCo) has suspended natural gas transportation services to the Ghana National Petroleum Corporation (GNPC),deep throat sources have confirmed to the Graphic Business.

This follows the inability of GNPC to settle its indebtedness to WAPCo to the tune of over a US $13.99 million.

The decision, which took effect from 1 July, comes after a series of negotiations between the two entities over debt arrears, although the GNPC paid US $1.246 million to WAPCo last week.

WAPCo, responsible for transporting natural gas from Nigeria to several countries in West Africa, in a letter dated 27 June to the GNPC, cited the payment arrears as the primary reason for the interruption.

This means that GNPC will not be allowed to flow any gas, including the 60,000 MMBtu/ day firm transportation services mainly from Takoradi to Tema.

The sudden halt in gas supply to GNPC has raised alarm bells among industry experts, as the country’s energy generational mix relies on natural gas and thermal for electricity production, with the GNPC playing a crucial role in ensuring a steady supply to power plants across the country.

The suspension, therefore, threatens to disrupt the nation’s energy stability and potentially lead to power shortages.

The interruption in gas supply has also sparked concerns among citizens, who fear a return to the frequent power outages experienced in the past. However, experts are hopeful that a resolution can be reached promptly, given the significance of the issue for both WAPCo and GNPC.

As negotiations continue, Ghana remains on high alert for potential energy shortages.

Power production

Last week, the government assured citizens that contingency plans are in place to ensure minimal disruption to power supply, including increased reliance on other energy sources such as hydroelectricity and thermal generation after independent power producers threatened to shut their operations over debt arrears.

So far, the Electricity Company of Ghana and the IPPs have agreed on a settlement that covers 30 percent of debt arrears.

A source familiar with the situation told the Graphic Business that the situation highlights the importance of diversifying the country’s energy mix and reducing reliance on a single source.

“It also serves as a reminder of the need for effective communication and collaboration between stakeholders to ensure a stable and sustainable energy sector,” the source said.

The source added that both WAPCo and GNPC are expected to engage in intense negotiations in the coming days to find a resolution and restore gas supply to GNPC.

“The outcome of these talks will undoubtedly have significant implications for Ghana’s energy stability and the overall well-being of its citizens,” the source added.

Transportation

WAPCo, in June 2019 completed commissioning and performance testing of the Takoradi phase of the Takoradi – Tema Interconnection Project (TTIP) and began transporting natural gas from the west (Takoradi) to the east (Tema) at the request of customers.

The project involved the expansion of WAPCo facilities at Takoradi and Tema as well as the tie-in of the West African Gas Pipeline (WAGP) system at Takoradi to the Ghana National Gas Company’s facility/line. This was achieved by the execution of various commercial agreements by the parties.

The TTIP is a collaboration between WAPCo, the Ghanaian Energy Ministry, the Ghana National Petroleum Corporation, the Ghana National Gas Company and Eni Ghana.

 

 

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