Uneasy calm as Ghana, Nigeria in talks over gas supply

Ghanaian government delegation is making moves to avert a drastic gas supply cut from Nigeria and also avoid a potential political crisis.

The Nigerian National Petroleum Corporation (NNPC) had threatened to cut gas supply by 70 percent to Ghana’s main power generation company to unpaid debts of $181 million. Ghana already suffers power shortages and Nigerian gas meets about 25 percent of its needs. The Nigerian Gas Company sent a letter to Ghana’s largest power producer, the Volta River Authority, announcing the possible cut in supply.

Ghana has not paid more than a year of bills for the fuel, the West African Gas Pipeline Corporation said. Ghana stopped paying for the fuel from Africa’s largest economy in August of 2014, Harriet Wereko-Brobby, spokeswoman for the pipeline company said.

However, Nigeria has deferred a plan to slash gas exports to Ghana thereby alleviating a threat that could have worsened electricity blackouts and caused another headache for the government.

The West African Gas Pipeline Company said it was “cautiously optimistic” that Nigeria’s N-Gaz consortium would accept a payment plan by Ghana’s power generation company, the Volta River Authority (VRA), after upcoming talks scheduled in Accra.

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 maneuver is limited, however, under the terms of an aid program 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.

Its fiscal problems include inflation of up to 17.4 percent in September, a currency that has fallen sharply in the last two years and a debt-to-GDP ratio of around 70 percent with what economists say are high debt service costs.

The Nigerian threat is a sign of budgetary stress and the strain of energy sector reform in Ghana, experts said.

Nigerian gas flows to Ghana through the West African Gas Pipeline Company’s pipe that runs via Benin and Togo. VRA buys the gas to fire power plants mainly in the east of the country.

Hydro supplies around 50 percent of Ghana’s power with the rest from its own gas and other sources.