PURC directed to draw strategy to clear $312m natural gas debt
The government has charged the Public Utilities Regulatory Commission (PURC) to come up with a debt management strategy to clear a debt of more than $312 million, being the cost of the supply and transportation of natural gas from Nigeria and Atuabo to the thermal units in the Tema and Aboadze enclaves.
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Currently, sources say the Volta River Authority (VRA) is yet to pay more than $130 million, which is the cost of gas transmitted to the authority by the Ghana National Gas Company (Ghana Gas), in addition to $82 million and $100 million payable to the West African Gas Pipeline Company (WAPCo) and Nigeria Gas (N-Gas), respectively.
According to information made available to the Daily Graphic, the VRA had since managed to pay GH¢36 million to WAPCo for July services, excluding the old debt of $82 million.
PURC confirmation
To avoid the looming threat from N-Gas and WAPCo and a possible shutdown of the Atuabo plant, the PURC has confirmed being charged with the responsibility of coming up with a debt management strategy, which will soon be submitted to the Cabinet for approval for a scheduled payment plan to stakeholders.
Currently, independent power producers (IPPs) owe the VRA millions of dollars for the natural gas used to generate power.
However, the IPPs say until the Electricity Company of Ghana (ECG) pays what is owed them, they will not be in a position to pay the VRA.
Difficulty
Daily Graphic’s checks showed that the IPPs had signed a power purchase agreement with the government for the state generator, the VRA, to supply them natural gas to run their turbines.
In response, however, the ECG claimed the government was the biggest defaulter and that until it redeemed its indebtedness, the company would not be in a position to honour its debt obligations to the IPPs.
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Asked how much the government owed the ECG, an official source told the Daily Graphic that “the Finance Ministry is disputing what the ECG put out as being how much the government owes us over the years”.
It said until an agreement was reached between the ECG and the government, “we will not be in a position to say what the government owes us in specific terms”.
Distribution system
Currently, the VRA receives the bulk of natural gas and supplies it to the Asogli plant, the Takoradi International Company (TICO) and other IPPs in Tema to keep their turbines running.
However, there has been a snowballing debt because the ECG is not in a position to collect realistic prices per kilowatt from customers.
Experts say the debt cycle is likely to be with the nation for a long time if the current low tariff regime remains where it is.
They explain that the system has been exposed by the low level of water in the Volta Lake which, over the years, has been covering up for the country’s unrealistic tariff regimes, coupled with the inefficient distribution network.