The other day, I listened to the running mate of the opposition New Patriotic Party (NPP), Dr. Mahamudu Bawumia inferring the cause of the power crisis currently plaguing our country. He surmised his assessment of the entire crisis during a lecture he delivered on the theme; “The IMF Bailout: Will the Anchor Hold?” held at the Central University College.
According to Bawumia, the cause of the ensuing power crisis can all be whittled down to a single denominator – That the Government of Ghana is purportedly indebted to the Nigerian Gas Company Ltd (NGC) to the tune of a Hundred Million United States Dollars (USD 100.00Million).
At a time when Ghanaians are anxious to see an end to this crisis; several concerned citizens have called on the main opposition NPP to come forth with alternatives to resolving the issue; or still their diagnosis of the problem, so as to present an objective picture to the citizenry. It was therefore interesting when the good Doctor burst onto the scene with his supposed “Eureka” diagnosis of the problem.
Consequently, it is expedient to hold his prognosis to the acid test of the facts on the ground to see if the relevant agencies, or even government, can rely on his position as instructive to resolving the crisis.
Can we confirm that the debt of USD 100million owed to NGC is the cause of Dumsor? Is that the fundamental reason why we are in this predicament? As a business developer who has had to consult for energy sector concerns, the only related 100mill USD debt that readily comes to mind is that of the financial transaction that berthed the West African Gas Pipeline Company Ltd (WAPCo). Since the flow of gas never occurred as projected by the financial modeling behind the deal, the sub-regional gas transporter is yet to make up for the debt investment in the project.
That however has nothing to do with VRA owing gas purchase to NGC. In fact, anybody who has followed the trends and documents in the energy sector would have known by now that, since the beginning of 2014 and even earlier, the VRA was well aware that NGC was not going to supply adequate gas to meet their generation target for 2015. This is simply because; the NGC doesn’t have enough gas to supply Ghana after meeting their domestic commitments. That is why some of us remain disillusioned that government had to wait till now without offering a practical solution.
It is also instructive to know that, projections were made that more gas treatment plants will be put in place in Nigeria once WAPCo is established to ensure copious gas flow. But as it stands, there are still only two Wells with gas treatment plants under the NGC- all the other Wells in Nigeria still flare gas. The reason being that, most investors are bearish when it comes to putting funds in Nigeria’s gas (which belongs to the state solely – as is the case in Ghana); as opposed to Nigerian crude- in which private investors have heavy stakes.
Another reason accounting for the drought of gas supply to Ghana has to do with the drive by the Nigerian National Petroleum Corporation (NNPC) to boost domestic gas supply under the Nigerian Gas Master Plan. Under this arrangement, Nigeria is to accelerate industrialization on the back of massive utilization of gas to provide a home-grown solution to the West African giant’s energy crisis. As such, gas supply to Ghana and elsewhere has become secondary to NGC’s agenda; hence the gas crunch.
Also, the political climate in the most populous African country has hindered anticipated capital inflows for developing the energy sector; and for that matter, gas production. Currently, it is essentially Shell that is still big on Nigerian crude – of course, as the second biggest company in that sector, they have the muscle to stand the risk of Boko Haram et al; a situation which most investors will rather avert.
If we are to assume that Bawumia’s inference to a USD100 million were true, some critical analyses need to be made to establish the authenticity or otherwise of that assertion as a veritable cause of the crisis.
With a monthly payment in the region of around USD 18 million by VRA to NGC for gas supply, the purported debt stock, according to Bawumia, amounts to around 5 months of deficit. However, it is a fact that we began experiencing this energy challenge well over a year ago. So why would VRA or Government continue to obtain Light Crude Oil (LCO), which is rather far more expensive for generation, instead of paying off their 5months debt in order to obtain gas for cheaper generation? This doesn’t add up.
Secondly, the government is looking at a 10 years arrangement for two power barges from turkey; with cost estimates that will amount to about a billion annually. Why would government consider this option if they had the more cost effective alternative of simply paying a relatively meager USD 100million (according to Bawumia) to get the crisis resolved? This also takes much away from the gravitas of Bawumia’s allegation.
In fact, putting the debt issue aside, anybody with a little knowledge in the sector is aware of the other technical reasons that account for why we are here today. Even though government intervention has been far from admirable, Bawumia’s assertion can also not be held as a fair reflection of why the country has been plunged into darkness.At least, at public lectures of this kind, we expect our honored experts to go further in providing concrete causative factors and ideas for resolution – not nuggets of propaganda simply coined to tinkle the political sensibilities of the public.