Ghana: ACEP, IMANI Demand Cancellation Of Dubious GNPC-Genser Energy Gas Sale Contract

Two policy think tanks—Africa Centre for Energy Policy and IMANI Africa—are demanding the cancellation of the gas sale agreement GNPC signed with Genser Energy, a private company in Ghana to provide power to mining firms in the western part of the country.

According to the think tanks, their analysis of the agreement shows the West African nation is losing several millions of dollars and wants the deal to be cancelled and subjected to gas sector regulations.

The GNPC, in 2020, signed a gas sale agreement with Genser Energy Ghana Limited to supply gas to the latter at $2.79 per MMBTU when the market price of gas was $6.08 per MMBTU.

To add more salt to the injury caused to the Ghanaian taxpayer, GNPC, in a letter dated April 12, 2021, addressed to the Energy Minister, Dr. Matthew Opoku Prempeh, explained that the Corporation and Genser Energy Ghana Limited have reached a commercial arrangement to enable Genser to build 102km 20″ pipeline network from Dawusaso to Kumasi by 31st December 2021.

The letter said GNPC would discount the price of natural gas to Genser from $2.79/MMBtu to $1.72/MMBtu for 55mmscfd of gas at take-or-pay and 20mmscfd of gas at take-or-pay.

ACEP and IMANI Africa find this position by the GNPC, which was endorsed by the Ministry of Energy, shocking.

Taking into consideration the market price of natural gas of $6.08 per MMBtu before the signing of the GNPC -Genser Energy Gas Sale Agreement, ACEP and IMANI noted that the consequence of the two poor decisions by GNPC deepened the gas price deficit by $4.36 per MMBtu.

They noted that when GNPC was making a case for tariff increment in its 2022 tariff proposal to the PURC, it assumed a realistic gas market price of $7.9 per MMBtu for all power companies but Genser was exempted.

“However, the PURC approved $5.9/MMBtu2, creating an under-recovery of $2/MMBtu for the gas market. To worsen this, Genser’s heavily discounted gas price of $1.72/MMBtu at the projected gas supply of about 320mmscf/d will create a cumulative cost of about $3.6 billion for the industry in the 16 years of the agreement if the PURC does not punish the other gas consumers to pay more.

“GNPC has failed to justify the discount provided to Genser on the gas commodity except that the Corporation agrees to use Genser’s pipelines over the 16 years instead of the gas discount,” the ACEP and IMANI Africa statement said.

Source: https://energynewsafrica.com