The Nation Newspaper

Category: Energy

  • CBN ‘should give fuel importers access to forex’

    Operators in the downstream sector of the oil and gas  industry have advised  the Central Bank of Nigeria (CBN) to make it easy for importers of petroleum products to  access  foreign exchange (forex) in the short term.

    The advice, is coming on the heels of the Federal Government’s  move to create a transparent market-driven system by publishing fuel prices.

    A communiqué by industry players and stakeholders, at the end of this year’s Oil Trading Logistics (OTL) Africa Downstream Week in Lagos, explained that fuel  subsidy is a disincentive to the supply chain infrastructure investment, market innovation and consumer value. It added that in view of low crude oil prices and naira devaluation, the country could no longer afford to pay  subsidies.

    They urged  the government to remove fuel subsidy and deregulate the downstream sector. Deregulation of the industry will attract appropriate investments, promote optimal efficiency, healthy competition, ensure efficient supply of petroleum products to the country and improve the infrastructures in the downstream sector, the communiqué  added.

    They want local refining of fuel to be prioritised and a deliberate shift initiated from importing products to building refineries. There is a need for a national refining policy, which defines the framework for encouraging investment in petroleum refining in Nigeria to facilitate increased national revenue and infrastructure development, the communiqué  said.

    It noted that in view of the significant number of jobs created by the downstream sector, the private sector should be encouraged to drive the growth of the industry through appropriate policies, while the government should provide the legal framework on which the  sector will be anchored, including the Petroleum Industry Bill (PIB). The PIB needs to be clarified and enacted with a view to ensuring legal certainty and promoting efficiency and competitiveness, it added.

    The communiqué said the downstream expansion of natural gas utilisation, with regulated gas price for domestic sales, governance limitation and institutional deficiency, constitute both a challenge and opportunity for gas supply. To stimulate investment in liquefied petroleum gas (LPG), multiple taxes and high tariffs should be reduced while the development of infrastructure and distribution channels such as local cylinder manufacturing, storage facilities, filling plants, bob-tail trucks, gas pipeline for residential consumption, automobiles and petrochemical plants, should be encouraged to enable the growth of LPG.

    The industry players also called for the removal of subsidy on kerosene to encourage the growth of LPG consumption in Nigeria. Also to encourage the development of the lubricants and base oils market, regulators, operators and consumers need to work together to stop the importation of substandard lubricants as well as the activities of illegal blenders while research and development should be ongoing for production of base oil in Nigeria.

    They stressed the need to have a strong advocacy group to work with the regulatory body, to drive home the point that a good standard of quality of lubricants must be maintained, they added.

    The communiqué read in part: “There is need to commercialise the pipelines by concessioning or outright sale, for an efficient distribution of the products. It is prudent to invest in an oil spill surveillance technology to monitor oil spillage through pipeline vandalism.

    “Oil companies are encouraged to undertake good corporate social responsibility to preserve the communities where they operate and to create a form of investment through job creation; thereby reducing threats of piracy and sea robbery.

    “There is need for government to ensure the roads are fixed and the rail system reactivated either by itself or through Public-Private Partnership (PPP), to enable the trucks move the products safely and promptly to the storage facilities while the rail assists the road networks.

    “Truck drivers should be enjoined to undertake trainings to improve their driving skills, for their safety and safety of the community.”

  • ‘Ikeja Electric needs 750Mw more to meet customers’ demand’

    ‘Ikeja Electric needs 750Mw more to meet customers’ demand’

    The Managing Director, Ikeja Electric, Mr. Abiodun Ajifowobaje, in a chat with reporters, speaks on the state of the company’s network, inadequate power supply from the national grid and efforts at metering customers as well as other issues in the power sector. EMEKA UGWUANYI was there.

    On taking over the company on November 1, 2013, you complained of low supply from the national grid. How much are you getting now and what do you need to service your customers?

    When we took over in November, 2013, power allocation to Ikeja was between 300 megawatts (Mw) and 320Mw. At a stage, it went to as low as 200Mw, and due to power supply crisis early in the year, at a time we got zero megawatt. Following improved power generation, especially driven by the progress recorded at Egbin Power which generates 1100Mw, we have in the last few months seen improved allocation to Ikeja, of between 450Mw and 500Mw. This has translated to more power supply to our customers.

    However, there is still a shortfall as we require 1,250Mw of power for customers within our network. Since the takeover, we have, among other strategic initiatives, continued to upgrade our network for seamless and equitable distribution of the power that we get. We have also localised cases where we have witnessed issues with transformers and feeders. We are responding to these issues whilst implementing a holistic overhaul programme that would reposition Ikeja Electric for optimal performance at all times and across our network. We have made significant progress in this regard and remained committed to working with all stakeholders to ensure that our esteemed customers are serviced excellently, efficiently and sustainably.

    When the new management took over, promises were made to replace bad transformers and upgrade assets, how far have you gone in fulfilling the promises?

    We are replacing bad transformers and upgrading our assets. Between January and June this year, we have replaced 96 defective transformers and have carried out major repairs on feeders and other installations. The upgrade is a continuous process that will ultimately ensure stability and efficiency within the network. There is one aspect of asset that we consider as the most crucial. That is, our people. We have since the takeover continued to invest in our people through local and foreign training programmes designed for all categories of staff. We are confident to state that our people are among the leading professionals in the power sector and we have a seamless succession plan for the future through our Graduate Engineering Programme (GEP). We believe that all of our human capital investments will culminate in the best possible service for our customers.

    What is the update on your metering scheme?

    We have rolled out our Advanced Metering Infrastructure (AMI) scheme. We projected that we would, on a monthly basis, install 12,000 meters. As soon as our contractors mobilise more teams, we will be hitting 15,000 meter installation per month. After our 2,000 meter installation pilot scheme, we have installed another 8,500. We need less than 2,000 units to hit the target, and this will be achieved by the end of this month. We had earlier said we would install 10,000 meters in October. The programme is very much on course and we are confident that we will realise our target of deploying 300,000 smart meters to our customers.

    What caused the delay in your metering scheme?

    We wanted to install meters that are smart, reliable, secure and futuristic.  This is in line with our customer-centric approach of ensuring service excellence in all our operations. Prior to the ongoing deployment, we had to embark on a thorough review of the project to ensure that the solution we adopt is one that will resonate with global best practice. We went through a lot of painstaking attention to details and stakeholder engagements to arrive at the meters we are currently installing. These smart meters that will be installed at residential and business locations can be monitored remotely from our office. A customer can also monitor how he/she progresses on a daily basis using the meter. For instance, if a customer intends to spend just N10,000 on a monthly basis, that could be achieved. What we have now is secure, tamper-proof and puts the power of conservation and management of usage in the hands of our customers.

    Have you put any programme in place to meter customers on your network?

    We have drawn our timetable on how we will cover our customers. In the first instance, we will meter 300,000 customers. But there is no way we can bring in the 300,000 meters for installation in one month. There are some we will install now, and it will continue until December 2016. The holistic timetable for the installation will be strictly adhered to as it was informed by parameters that are vital to the overall success of the project. In addition to the AMI project, our Board has just approved the implementation of Credited Advance Payment for Metering Implementation (CAPMI) scheme to boost the process of metering. The fact still remains that the meters are free–whether through CAPMI or the AMI scheme. If customers pay for meter under CAPMI, Ikeja Electric will refund such monies over time. The procedure, through which our customers can leverage our CAPMI scheme, will be made public soon. The meters will help us effectively monitor and manage customer consumption as well as minimise losses. Secondly, our Customer Enumeration, Technical Audit and Asset Mapping (CETAAM) initiative is targeted at making every consumer of power within our network, our customer indeed. This initiative has kicked-off fully and we are going from house to house. The plan is to ensure that customers are adequately captured on our database. This will ultimately lead to enhanced service delivery and more efficiency in billing. This aspect of the initiative is the technical audit. All the power assets from transformer, cables, poles, and so on, used for our operations will be captured using our technology. In the long-run, immediately we identify a customer, we can map the customer to a transformer; map the transformer to a feeder; among others. The data is needed to manage the system effectively. We expect that this project will be concluded in the next seven to 10 months. A combination of the metering scheme and the CETAAM initiative is certain to produce seamless service within the Ikeja Electric network. In fact, by-passing of our meters and other acts of sabotage will ultimately be checked. By the time we finish CETAAM, we will be able to identify all the weak technical points on our network and plan on how to do network expansion and maintenance. Of course, this will assist us to do good management and balancing.

    Electricity tariffs are expected to rise this year, according to NERC. What is Ikeja Electric’s position in this regard?

    Our 10-year tariff schedule went through the regulator’s process. The truth is that whatever is realised from the tariff is used to fund the entire value chain of the power industry – generation, transmission, NERC (Nigerian Electricity Regulatory Commission), and others. When we say tariff must be cost-reflective, we mean it must pay for everything along the value chain.  If the tariff is cost-reflective, the only thing that distribution companies keep is less than 20 per cent of the entire money made. NERC brought out a guideline, and part of the guideline is that we meet our customers and agree on pricing terms. We had to do public consultation with the Manufacturers Association of Nigeria (MAN) as well as other stakeholders and consumers. After that, we made our initial presentation to NERC. The regulator looked at it and referred us to the customers again to tell them what the new tariff would be after all cost parameters have been considered. We have made that input, and have submitted our tariff plan to NERC, waiting for its final approval. NERC had admitted that there is no way tariff review would be done without having a form of increase. The sector needs a tariff that will support the entire value chain of the power sector for efficiency and sustainability. We expect that the resultant cost-reflective tariff will help reposition the sector for improved service delivery. We would like to use this medium to appeal for the support and cooperation of our esteemed customers in this regard.

    What is your company doing to check the spate of vandalism of power equipment in your network?

    It is unfortunate that there are individuals out there whose activities have been detrimental to the progress of our projects in Ikeja Electric. In fact, there are certain consumers, who through illegal connections steal energy from the system. These people commonly referred to as “energy thieves” abound across the network and need to be checked through collaborative efforts that needs the support of well-meaning Ikeja Electric customers. The actions of these people led to disruptions within the system and also affected the process of effective billing. We appeal to our esteemed customers to help identify such people to ensure sanity and efficiency in the system. In our efforts to check this problem, we have been carrying along communities at various levels through continuing engagements. We have established collaborative initiatives with virtually all the security agencies and in fact, we have a working relationship with the Nigerian Security and Civil Defence Corps.

    Before, we could have as high as five cases of vandalism in a month; but now, following our collaborative initiatives, the cases have been drastically reduced. The process of identifying and prosecuting the energy thieves is one that requires the support of all customers within the network. Currently, over 10 people have been arrested for illegal connections and they will be prosecuted. There are still many more out there that need to be stopped. We urge customers to report any case of illegal connections to the nearest Ikeja Electric office. Let me also stress that customers should also report cases of extortion in any guise from people purporting to be our staff or members of staff. In Ikeja Electric we have zero tolerance for any form of unprofessional act by our staff. We are building a team of people, who are ethical and professional. That is the new Ikeja Electric, new spirit, new drive and new energy.

  • Oando invests $400m in lubricants production

    Oando invests $400m in lubricants production

    Oando Marketing Plc has  invested  $400million to produce a wide range of lubricants. It has also introduced a new lubricant, called Oleum SYN into the automobile market.

    Speaking at the unveiling of the synthetic lubricant, Oleum SYN, in Lagos, its Chief Operating Officer, Mrs. Williams Olaposi, said the product was introduced to meet the needs of users of top-of-the-range cars.

    Oando’s decision to produce synthetic lubricant, she said, was informed by the need to satisfy various layers or users of automobiles.

    She said: “The firm believes in meeting the yearnings of various users of automobiles in Nigeria. For years, the country has been using fairly used cars otherwise known as Tokunbo, and Oando has lubricants for people driving such cars.

    “In recent times, there has been a paradigm shift from the use of Tokunbo to new cars. Nigerians are now driving new and highly sophisticated vehicles, and the only way to satisfy people in that segment was to produce synthetic lubricant.”

    She said every litre of Oleum SYN comprises top quality base oil and additives, noting that the product has been certified internationally.

    Olaposi said Oando conducted several years of research before coming out with

  • DPR undertakes research on refineries

    To encourage the growth of the downstream sector of the petroleum industry, the Department of Petroleum Resources (DPR) has carried out a research on the refineries to determine their actual production level and what are needed for optimal output, its Director, Mordecai Ladan, has said.

    Ladan said the development became necessary to ascertain their capacities vis-à-vis the volume of petroleum products that would adequately cater for the needs of consumers.

    Ladan, who spoke at a panel session at the just-concluded Oil Trading and Logistics (OTL) Expo in Lagos, said effective refineries were crucial to the growth of the downstream segment of the oil and gas industry, adding that DPR was working towards recording success in that regard.

    Represented by the Deputy Director in-charge of Engineering and Standards, Mr. Olumide Adeleke, the DPR chief, said the industry had been battling with problems, such as availability and transportation of petroleum products. He said the problems would be resolved soon.

    He said: “When you talk of availability of petroleum products, you need to talk about transportation of the products vis-à-vis the quantity or volume of the refined products. In DPR, we have done a considerable level of analysis or findings on the refineries required to meet the growing demands of domestic consumers.”

    Ladan said transporting crude oil to the existing refineries was a problem, which the industry was grappling with. He noted that pipelines through which crude oil and petroleum products are transported by stakeholders in the value chain are old.

    He said the obsolete pipelines need to be replaced  as part of efforts to encourage growth of the industry. He explained that the operating environment is not conducive enough for operators in the oil and gas sector, stressing that the development inhibits its growth.

    “The government has to come in, by providing an environment that is conducive for investment. There should be some form of regulations to stimulate growth in the industry. There is the need to develop a policy in the direction of safety of the environment. The environment should be secured with a view to discourage pipeline vandals,” he added.

    Also, the Managing Director, Mobil Oil Nigeria Plc, Mr. Tunji Oyebanji, said investment in local refineries is key to the growth of the downstream sector, adding that private refineries are yet to come on stream, years after obtaining approval from the Department of Petroleum Resources.

    This, according to him, is due to lack of funds, arguing that banks are not ready to advance credit to them for reasons best known to them. He added that many of the operators have assets they can present as collaterals, but they do not have cash. “The problem of the companies approved by DPR to operate refineries is not collaterals, but cash. That accounts for the reason why local refineries have not taken off in the country,” Oyebanji said.

  • Fed Govt inhibits downstream growth- ex-PPPRA’s boss

    The Federal Government should be blamed for the abysmal performance recorded in the downstream sub-sector of the oil and gas industry not private operators, former Executive Secretary, Petroleum Product Pricing Regulatory Agency (PPPRA), Mr Reginald Stanley, has said.

    He said the actions of successive governments showed that they were not ready to formulate policies to accelerate the growth of the sector.

    He said the Federal Government did more damage to the downstream sector by not deregulating it.

    Stanley said the decision of the government to hold on to the regulation of the sub-sector was killing initiatives, adding that the development has stalled the development and implementation of ideas that would drive activities in  the sector.

    Stanley, while speaking during a stakeholder’s forum in Lagos, said it is either the government improve the growth of the downstream sub-sector by deregulating it, or allow it to suffer more problems.

    He said: “Angola, Ghana, India and other countries have deregulated the downstream segment of the petroleum industry, and they are better for it. Nigeria cannot be an exception if it really wants to move the capacity utilisation in the downstream above its current capacity of 25 per cent.

    He added: “We (as Nigerians) should be able to learn a lesson from Ghana that deregulated its downstream sub-sector, and has since then, been having it good in the area of production of petroleum products fuel, fixing of their prices, making the products available to consumers, among other issues.”

  • NCDMB, Shell, OEMs begin work on industrial park

    The Nigerian Content Development and Monitoring Board (NCDMB) and Shell Petroleum Development Company of Nigeria (SPDC) have begun work on a mini-industrial park, a major step towards the attainment of Nigerian Content goals.

    It took place in Port Harcourt, Rivers State capital, and it featured three original equipment manufacturers (OEMS) – Alcon, Fiddil, and Prime Atlantic – utilised by Shell for its operations. Each got 1,800 square metres within Shell’s industrial area to build facilities and domesticate some of their services.

    The Shell-promoted industrial park is in furtherance of the NCDMB’s Equipment Components Manufacturing Initiative (ECMI) introduced in 2011, to encourage OEMs and their representatives to set up facilities for manufacturing of spare parts and accessories of equipment for oil and gas operations.

    NCDMB Executive Secretary Denzil Kentebe said the event re-affirmed government’s vision of using Nigerian Content as an instrument for the industrialisation of the economy. He listed the targets of the initiative to include transformation of representatives of OEMs from “marketers to manufacturers and maximize retention of industry spend within the economy, on procurement of equipment, manufacturing, supply, installation and after sales services.”

    Kentebe identified other targets to include reversing the trend of equipment rentals by encouraging Nigerians to acquire equipment for activities, such as drilling and construction.

    He said: “To achieve the ECMI policy thrust, the board introduced the Nigerian Content Equipment Certificate (NCEC) as a Local Content Requirement (LCR) for participation in bids connected to the supply or utilisation of equipment in the oil and gas industry. This is to ensure that the full capacities of local manufacturers or owners of equipment are exhausted before any equipment can be imported.”

    He praised  Shell for embracing the ECMI, having obtained approval from the NCDMB in 2012 for OEM domestication scheme. He enjoined others to embrace such collaborative efforts to develop the local supply chain.

    Kentebe said domestication of local manufacturing was key to Nigerian content growth and the platform for value-adding activities, such as research and innovation, processing of local raw materials and establishment of ancillary services; all of which create employment and empowerment for youths and contributes to the gross domestic product.

    SPDC Managing Director and Country Chair Osagie Okunbor described the initiative as a key intervention of Shell Companies in Nigeria to support Nigerian Content development, adding that it would improve cycle time, enhance service delivery and engender long-term economic benefits, including employment for Nigerians.

    He listed key objectives to include increase in control, simplicity and potential for long-term cost saving.

    Okunbor, represented by the Project Director, Mr. Toyin Olagunju, said the OEMs and their Nigerian local partners were issued the NCEC by the NCDMB in 2012.  He said Shell Companies in Nigeria were committed to supporting Nigerian Content and other strategies aimed at increasing the participation of businesses in the oil and gas industry.

    “SPDC supported a Nigerian manufacturer, Egba Split Clamp Nigeria Limited, to refine their products with hydro and pressure tests. Egba clamps are now approved for use in SPDC operations and we are working towards the deployment of the clamps in our operation. We will also continue to support other manufacturing initiatives including pipe mill development, development of drilling fluids and production chemicals,” Okunbor added.

  • Oando unveils new lubricants

    Oando unveils new lubricants

    Oando Marketing Plc has  spent  $400million to produce a wide range of lubricants. It also introduced a new lubricant for the automobile market.

    At the unveiling of the synthetic lubricant, Oleum SYN, in Lagos, its Chief Operating Officer, Mrs. Williams Olaposi, said the product was introduced to meet the needs of users of top-of-the-range cars.

    Oando’s decision to produce synthetic lubricant, she said, was informed by the need to satisfy various layers or users of automobiles.

    She said: “The firm believes in meeting the yearnings of various users of automobiles in Nigeria. For years, the country has been using fairly used cars otherwise known as Tokunbo, and Oando has lubricants for people driving such cars.

    “In recent times, there has been a paradigm shift from the use of Tokunbo to new cars. Nigerians are now driving new and highly sophisticated vehicles, and the only way to satisfy people in that segment was to produce synthetic lubricant.”

    She said every litre of Oleum SYN comprises top quality base oils and additives, noting that the product has been certified internationally.

    Olaposi said Oando conducted several years of research before coming out with the product, stressing that a lot of money was invested in the production of lubricants by the company.

    “A log of research was conducted by Oando Marketing  in order to produce a wide range of lubricants. We at Oando have invested in our plants in Apapa, Lagos and Kaduna. The two plants have a combined capacity of over 100 million litres.  So, if you talk about new bottles, adverts, research in terms of additives that we have used, over $400millon has been invested to ensure that Oando products come out in the best package one can think of,” she said.

  • DPR begins licensing of cooking gas retailers

    As part of measures to reduce frequent cases of cooking gas accidents, the Department of Petroleum Resources (DPR) has commenced the process of licensing cooking gas retailers.

    The move, according to the President of Liquefied Petroleum Gas Retailers (LPGAR), Association, Mr. Michael Umudu, was also aimed at ridding the sector of quacks and unlicensed professionals.

    Umudu stated this at a safety awareness campaign organised by the Lagos chapter of LPGAR in Lagos state. He said the high rate of cooking gas accidents across the country remained a cause for concern to the association, hence, the decision of the DPR.

    He said the safety awareness campaign was put together by the association to equip its members ahead of the licensing exercise by DPR while also building members’ capacity to be in tune with latest safety trends. The awareness programme, he said, was in line with Health Safety and Environment (HSE) practice in Nigeria’s oil and gas industry.

    The Chairman, Lagos chapter of LPGAR, Mr. David Okenwa said the training had become imperative in view of the growing demand for cooking gas as an alternative to kerosene and firewood. Okenwa said: “Many of our members don’t know much about the safety aspect of this business. That is why we engaged a consultant who will train them on the safety aspect because there are cases of related to gas hazards in the country.

    “As an association, we have deemed it fit to bring our members to the classroom to widen the scope of their knowledge base so that they will be more careful when carrying out their duty.”  He warned that any member found wanting in any fire incident related case after the training, will be dealt with according to the rules governing the association.

    The Managing Director of Crownbondis Global Resources Nigeria, an HSE consultant, Mr. Adebiyi Adewale, said gas retailers as the last link, must be adequately equipped with the knowledge of safety handling of gas in order to reduce the cases of gas accidents.

    Safety tips given to retailers during the training included how to transfer LPG from bigger cylinders to smaller ones, proper kits to use; checking expiring date of cylinders; how to check for leakages, and the consequences of not adhering to safety standards.

  • Simba Group wins award at energy expo

    Simba Group, an indigenous conglomerate with business interests in communications, agriculture, software, power and alternative energy, won award at the just concluded 2015 edition of Nigeria Alternative Energy Expo held in Abuja.

    Simba Group is a leading player in the power and alternative energy sector, and also a distributor of luminous brand of inverters and power backup solutions. The firm was conferred the Nigeria Energy Award in the Commercial Category.

    The award ceremony was part of the three-day programme to mark the fifth edition of the Nigeria Alternative Energy Expo, which promotes and recognizes the commitment of Nigerians in the area of energy sustainability and efficiency.

    The organizers of the event said the initiative is designed to honour and recognise companies (of all sizes), government departments, schools, individuals and organisations that demonstrated commitment to the advancement of energy efficiency by implementing policies, projects and training that are relevant, innovative and effective in the fields of green economy, energy efficiency, urban planning, communication, ecology, engineering, policy, clean technology, and lean process, among others.

    The Marketing Manager, Wandel International Nigeria Limited, an arm of Simba Group of Companies, Mr. Rajneesh Gupta expressed the company’s sincere gratitude to the organisers of the event for recognising the efforts being made by both individuals and private organisations to the development of sustainable energy and the power sector in Nigeria.

    Gupta noted that the Nigeria Alternative Energy Expo over the years has become a unique platform where companies, private organisations, government and other relevant stakeholders network, transfer knowledge and skills and exhibit innovative product to potential partners hence the key reason for Simba Groups’ strong participation in this year’s programme.

    “We are very honoured to have received the Nigeria Energy Award – commercial category in this years’ Nigeria Alternative Energy Expo. This award clearly demonstrates the company’s commitment for a better environment and its effort in promoting clean, affordable and equitable energy sufficiency in Nigeria through its luminous range of inverters, static UPS and batteries along with its innovative and high performing renewable energy solutions under its brand name of Simba Solar” he said.

  • Nigeria, Ghana back $185m gas pipeline debt settlement

    The Nigerian and Ghanaian governments have supported amicable resolution of the $185 million owed the West African Gas Pipeline Company (WAPCo) and gas suppliers by the Volta River Authority’s (VRA) of Ghana.

    The West African Gas Pipeline Company limited (WAPCo) is a limited liability company, which owns and operates the West African Gas Pipeline (WAGP). WAPCo is a joint venture between public and private sector companies from Nigeria, Benin, Togo and Ghana with a mandate to transport natural gas from Nigeria to customers in Benin, Togo and Ghana in a safe, responsible and reliable manner, at prices competitive with other fuel alternatives.

    The WAPCo Managing Director, Mr. Walter Perez, had told reporters that owing to the huge debt, gas delivery to VRA would be curtailed. The cut in gas supply to VRA, it was learnt, would negatively affect electricity supply to Ghana; hence the governments of the two countries have intervened to ensure that such action is not implemented.

    Currently, VRA and its gas shipper, N-Gas (a joint venture company owned by NNPC, Shell and Chevron that delivers gas through the West African Gas Pipeline Company (WAGPCo) to Ghana), are in discussion, with the support of governments of the two countries. The outcome of the discussion would determine if WAPCo and N-Gas would go ahead with the plan to curtail gas supply to VRA.

    Perez said: “Since August 2014, VRA has received natural gas and pipeline-related transportation services totaling USD 231 million through the West African Gas Pipeline (WAGP). As of today, VRA has paid only USD 46 million of this amount. Of the outstanding balance of USD 185 million, VRA owes USD 109 million to WAPCo with the balance being owed to the other parties in the gas supply chain.

    “ WAPCo has regularly engaged VRA, the Ghana Public Utilities and Regulatory Commission (PURC), the relevant ministries, and even the highest level of the government to find a solution to this situation before it reached crisis level.  Unfortunately, these efforts have not achieved the desired result.

    “Just one month ago, WAPCo received a formal notification from VRA’s gas shipper, N-Gas, that deliveries to VRA should be curtailed effective 16 October 2015.  In doing so, N-Gas informed WAPCo of the intent of one of its major gas suppliers, Nigeria National Petroleum Company (NNPC), to curtail gas supply as a result of N-Gas being in payment default due to the inability of VRA to settle its gas supply and gas transportation invoices.”

    He continued:“We are very certain those in positions of authority in Ghana are fully aware of this information, and we are hopeful they are taking appropriate action to prevent curtailment.  Otherwise, WAPCo is contractually obligated to curtail deliveries to VRA as of 00:00 hours on Friday, 16 October 2015.

    “WAPCo management is keenly aware and sensitive to the effect that this directive from N-Gas could have on power generation in Ghana. We find it unfortunate that the VRA debt situation has been allowed to deteriorate to the point where it now jeopardizes WAPCo’s very existence as a company, and in doing so, it also jeopardizes the only viable option of providing sufficient on-time offtake assurance for Ghana’s TEN and Sankofa developments.

    “I’d like to emphasize that we remain hopeful in spite of the current crisis as we believe the WAGP remains critical energy infrastructure for Ghana.  Further, we are firm in our belief the WAGP is vital to the on-time and lowest-cost delivery of Ghana’s indigenous natural gas resources. To that end, WAPCo will continue to dialogue with the relevant authorities and trust that WAPCo, a company in which Ghana owns significant shares, will not be allowed to go under.”

    NNPC spokesman, Ohi Alegbe, however, said the Federal Government has reached an agreement with Ghana on the modalities to settle the outstanding N33.8bn owed by the Volta River Authority (VRA) on gas supplied for power generation by a Nigerian company, N-Gaz. The highlight of the agreement is that the total sum of gas supply debt will be cleared by February 2016 at the latest, he added.

    Alegbe said the agreement was reached between a team led by the Group Managing Director of the NNPC, Dr. Ibe Kachikwu, and the President of Ghana, John Dramani Mahama, noting that VRA will pay the balance of August and September invoices by October 31 at the latest.