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West African Energy Ministers meet to address gas tariff impasse

The issue of tariffs for gas from the West African Gas Pipeline (WAGP) would take centre stage at the Committee of Ministers (CoM) meeting being attended by the Energy Ministers of Ghana, Nigeria, Benin and Togo, in Accra.

The meeting is expected to broker a solution to an impasse between the West African Gas Pipeline Company Limited (WAPCo) and the West African Gas Pipeline Authority, who are developing a new tariff methodology.

The methodology would also allow the tariff quantum to be set and effected by 1st January, 2019.

In effect, they are to find sustainable solutions for the availability of gas, at affordable price and the best way to recover arrears from the gas exchanges.

Mr. Walter Perez, Managing Director of WAPCo, said the new tariff review cycle was critical to all parties in the gas value chain as it set the stage for the future development of the market for pipeline gas in the West African sub region.

Speaking at the opening of the CoM meeting, on Friday, Mr. Perez said the new tariff methodology was being developed to accommodate multiple entry and exit points along the pipeline, including the reverse flow from Takoradi to Tema.

“If I’m to speak frankly, I will say that whether or not we will reach an agreement before January 1 remains an enormous question in my mind,” he said.

He, therefore, appealed to the CoM to help broker a win-win solution, which would allow them to move ahead with the commercial framework needed to actualise the reverse flow and bypass projects.

WAPCo, he said, was committed to moving beyond this stalemate.

Mr. Peter Amewu, Minister of Energy, stressed the need for the tariffs to be competitive, saying gas would become a hard sell if the Delivered Gas Price, compared to other alternative fuels, was prohibitive.

He cautioned WAPCo against assuming that there was a captive market which would wholeheartedly accept any rates charged.

He said Ghana had made it clear to WAGPA during the TP3 Consultative process that should Ghana consider the building of an alternative onshore pipeline, which would be a greater competitor to the WAPCo.

“WAPCo should, therefore, not create a valid business case for Ghana to go that route to build an onshore pipeline from Takoradi to Tema,” he stated.

Mr Amenyo urged the WAPCo, and other stakeholders to cooperate to ensure that a workable tariff was agreed that would be ‘attractive and economical for all parties’ as well as sustainable over the long haul.

Mr Sediko Douka, ECOWAS Commissioner for Energy and Mines, said ECOWAS, was undertaking a number of initiatives to address the energy challenges in the sub region, which required the availability of gas.

This included projects the newly developed ECOWAS Master plan for power generation and Transmission from 2019-2033.

The master plan, he noted, included 75 regional projects to produce about 15.5 gigawatts (GW) of energy, 31.1 percent of which would be thermal power plants using natural gas.

“Today’s meeting has to find sustainable solutions for the availability of gas, at affordable price and the best way to recover arrears from the gas exchanges,” he stated.

Source: GNA

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