may soon arrive Nigeria to hold emergency talks to restore gas supply to the country after a recent drastic supply cut which may lead to a potential political crisis, a government spokesman said.
The Nigerian National Petroleum Corporation announced that it had cut gas supply to Ghana’s main power generation company due to unpaid debts of $181 million. Ghana already suffers power shortages and Nigerian gas meets about 25 percent of its needs.
“They will be sending another delegation to Nigeria. We are praying that they are able to negotiate so that this matter can be resolved to the benefit of both parties,” a spokesman for the power ministry told Joy FM radio on Thursday.
Nigeria suspended the flow of natural gas to Ghana over unpaid bills, local media reported on Wednesday, saying an amount of some $180 million was outstanding.
News outlets reported that Ghana’s state-owned Volta River Authority owes N-Gas, which in turn is in arrears to the West African Pipeline Company, the operator of the conduit that transports gas from Nigeria to Benin, Togo and onwards to Ghana.
The latter’s arrears have been building since October 2015, and the Ghanaian government subsequently missed its February 2016 payment deadline.
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 manoeuvre is limited, however, under the terms of an aid programme 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.
“It is extremely embarrassing for the government. It touches on credibility … Every investor will be looking at that and saying, ‘Is this a country to do business in?’” Ben Boakye of the Africa Centre for Energy Policy think tank told Reuters.
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.
The power crisis stems from a fall in supply from Ghana’s dams, government underpayment to the Electricity Company of Ghana, residents’ illegal consumption and tariffs too low for VRA to recoup its costs.