The Public Interest and Accountability Committee (PIAC) has expressed concern over an amount of US$843million owed Ghana National Gas Company (GNGC) by power utilities, lamenting that the situation denies the Ghana Petroleum Funds of much needed money for investment and development.
GNGC, the nation’s premier mid-stream gas business company, processes and sells gas to power producers and industries; but PIAC, in its 2020 annual report, said at the close of last year US$843million was owed to the state-owned company by power utilities for gas supplied.
The Committee’s report described the power sector indebtedness as being ‘still too high’ despite implementation of the Cash Waterfall Mechanism (CWM), which among other things seeks to clear power sector-related debt.
Although GNGC has received payments through the mechanism, it noted that its indebtedness continues to be high because the payments from CWM – which is supposed to pay for Volta River Authority’s (VRA) debt to Ghana Gas – is meagre. “For us at PIAC, revenues from raw gas are to be paid into the Ghana Petroleum Funds; and if the monies are not paid, it means that the Funds are denied these revenues,” Isaac Dwamena, Coordinator-PIAC, told the B&FT.
Ideally, he said, these revenues when paid are to be distributed to the Heritage and Stabilisation Funds and Ghana National Petroleum Corporation (GNPC), as well as the national budget.
The non-payment for gas purchased, Mr. Dwamena further lamented, therefore holds implications for investments and yields of the Ghana Petroleum Funds.
“The payment deficit to GNGC could affect the reliable supply of indigenous gas to power producers who use a greater part of the commodity, and to non-power entities. If the financial hurdles are not cleared, it could affect GNGC’s system maintenance, upgrade, and future expansion work.
“As a matter of fact, liquidity is key in maintaining the integrity of a gas network to avoid system collapse. The GNGC has become a backbone for the country’s power sector. As a result, a system collapse or any unplanned downtime would have dire consequences for power supply,” says Executive Director of Institute of Energy Security (IES), Nana Amoasi VII.
Apart from the revenue shortfall constituting a threat to the power sector, he posited that it also poses a financial hazard to the economy.
