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Ghana Owes $160m for Gas Supply from Nigeria

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  • Ghana Owes $160m for Gas Supply from Nigeria

Ghana owes a total of $160m for gas supplied to its largest power producer, Volta River Authority, from Nigeria through the West Africa Gas Pipeline, our correspondent has learnt.

N-Gas Limited, a company owned by the Nigerian National Petroleum Corporation, Chevron and Shell, buys gas from oil companies in Nigeria and transport it to Ghana through the $1bn WAGP.

The pipeline, which is operated by the West Africa Pipeline Company Limited, was built to supply natural gas from Nigeria to customers in Benin, Togo and Ghana.

N-Gas has an off-take agreement with Ghana to supply 120 million standard cubic feet of gas per day to the VRA. But supply to the country had fallen short of the contractual volume in recent years.

“There is a current arrangement between the gas suppliers and the off-taker that the volume will be 60mmBtu,” the General Manager, Corporate Affairs, West Africa Gas Pipeline Company Limited, Harriet Wereko-Brobby, told our correspondent in response to questions sent via a text message.

She said the off-taker (VRA) had established a payment security arrangement for gas consumed to halt “debt accumulation going forward.”

“There is still an outstanding debt of around $160m to be paid to the supplier, N-Gas, and it is expected that about $30m will be paid shortly,” Wereko-Brobby added.

GhanaWeb recently reported that the volume of gas supplied to Ghana from Nigeria for power production had reduced by about 50 per cent.

It said the situation had been attributed to the inability of Ghana to settle its long-standing debts as stipulated in the gas supply contract, and vandalism of gas pipelines in Nigeria.

The Board Chairman, VRA, Kweku Awotwi, was quoted to have said, “We are at about half of what we have been contractually promised, which is not good enough. There are many reasons for that: the vandalism of pipelines and the fact that we have not paid our bills. We owe them about GH180m; what do you expect them to do?

“Now, we are getting the gas because the VRA is pre-paying for that gas. We are putting in Letters of Credit to get the gas.”

In 2016, Nigeria saw a resurgence of militant attacks in the Niger Delta that caused the nation’s oil production to plummet to a near 30-year low and disrupted gas supply to power plants.

Commenting on the debt owed by Ghana for the supply of gas through the pipeline in May last year on the sidelines of an event in Badagry, the Managing Director, WAPCo, Mr. Walter Perez, told our correspondent, “We are delivering gas now because we have put arrangement in place for Ghana to prepay for the deliveries that they receive, and so that is working. We have every expectation that this will continue to work.”

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Minister of Power Pledges 6,000 Megawatts Electricity Generation in Six Months

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Adebayo Adelabu has made a bold pledge to ramp up electricity generation to 6,000 megawatts (MW) within the next six months.

This announcement comes amidst ongoing efforts to tackle the longstanding issue of inadequate power supply that has plagued the country for years.

During an appearance on Channel Television’s Politics Today program, Adelabu said the government is committed to resolving the issues hindering the power sector’s efficiency.

He expressed confidence in the administration’s ability to overcome the challenges and deliver tangible results to the Nigerian populace.

Currently, Nigeria generates and transmits over 4,000MW of electricity with distribution bottlenecks being identified as a major obstacle.

Adelabu assured that steps are being taken to address these distribution challenges and ensure that the generated power reaches consumers across the country effectively.

The minister highlighted that the government has been proactive in seeking the expertise of professionals and engaging stakeholders to identify the root causes of the power sector’s problems and devise appropriate solutions.

Adelabu acknowledged the existing gap between Nigeria’s installed capacity of 13,000MW and the actual generation output, attributing it to various factors that have impeded optimal performance.

Despite these challenges, he expressed optimism that the government’s initiatives would lead to a substantial increase in electricity generation, marking a significant milestone in Nigeria’s energy sector.

Addressing concerns about the recent decline in power generation due to low gas supply, Adelabu assured Nigerians that measures are being taken to rectify the situation.

He acknowledged the impact of power outages on citizens’ daily lives and reiterated the government’s commitment to providing stable electricity supply within the stipulated timeframe.

The Minister’s assurance of achieving 6,000MW of electricity generation in the next six months comes as a ray of hope for millions of Nigerians who have long endured the consequences of inadequate power supply.

With ongoing reforms and targeted interventions, there is optimism that Nigeria’s power sector will witness a transformative change, ushering in an era of improved access to electricity for all citizens.

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Nigeria’s Economic Woes to Drag Down Sub-Saharan Growth, World Bank Forecasts

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The World Bank’s latest report on the economic outlook for Western and Central Africa has highlighted Nigeria’s sluggish economic growth as a significant factor impeding the sub-region’s overall performance.

According to the report, while economic activities in the region are expected to increase, Nigeria’s lower-than-average growth trajectory will act as a hindrance to broader economic expansion.

The report indicates that economic activity in Western and Central Africa is set to rise from 3.2 percent in 2023 to 3.7 percent in 2024 and further accelerate to 4.2 percent in 2025–2026.

However, Nigeria’s growth, projected at 3.3 percent in 2024 and 3.6 percent in 2025–2026, falls below the sub-region’s average.

The World Bank underscores the importance of macroeconomic and fiscal reforms in Nigeria, which it anticipates will gradually yield results.

It expects the oil sector to stabilize with a recovery in production and slightly lower prices, contributing to a more stable macroeconomic environment.

Despite these measures, the report emphasizes the need for structural reforms to foster higher growth rates.

In contrast, economic activities in the West African Economic and Monetary Union are projected to increase significantly, with growth rates of 5.9 percent in 2024 and 6.2 percent in 2025.

Solid performances from countries like Benin, Côte d’Ivoire, Niger, and Senegal are cited as key drivers of growth in the region.

The report also highlights the importance of monetary policy adjustments and reforms in supporting economic growth.

For instance, a more accommodative monetary policy by the Central Bank of West African States is expected to bolster private consumption in Côte d’Ivoire.

Also, investments in sectors such as agriculture, manufacturing, and telecommunications are anticipated to increase due to improvements in the business environment.

However, Nigeria continues to grapple with multidimensional poverty as highlighted by the National Bureau of Statistics.

Over half of Nigeria’s population is considered multidimensionally poor, with rural areas disproportionately affected. The World Bank underscores the need for concerted efforts to address poverty and inequality in the country.

Sub-Saharan Africa as a whole faces challenges in deepening and lengthening economic growth. Despite recent progress, growth remains volatile, and poverty rates remain high.

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Fitch Downgrades China’s Outlook to Negative Amid Real Estate Slump

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Fitch Ratings has downgraded China’s economic outlook to negative, citing concerns over the country’s mounting debt and the ongoing slump in its real estate sector.

This decision casts a shadow over China’s economic recovery efforts and raises questions about the resilience of its financial system in the face of mounting challenges.

The downgrade comes at a critical juncture for China as the government grapples with the fallout from a prolonged downturn in the real estate market, which has long been a cornerstone of the country’s economic growth.

Fitch’s decision underscores the severity of the challenges facing China’s economy and the urgent need for policymakers to implement effective measures to address the underlying issues.

Amid growing uncertainty about the outlook for the world’s second-largest economy, Fitch warned that the Chinese government is likely to accumulate more debt as it seeks to stimulate economic growth and mitigate the impact of the real estate slowdown.

The agency’s negative outlook reflects concerns that China’s debt burden could continue to rise, posing risks to the stability of its financial system.

The real estate sector, which has been a key driver of China’s economic growth in recent decades, has been experiencing a pronounced slowdown in recent months.

This downturn has been exacerbated by government measures aimed at curbing speculative investment and addressing housing affordability concerns. As property prices continue to decline and housing sales stagnate, fears of a broader economic slowdown have intensified.

China’s government has sought to downplay concerns about the impact of the real estate slump on the broader economy, emphasizing its commitment to maintaining stability and pursuing sustainable growth.

However, Fitch’s downgrade suggests that the challenges facing China’s economy may be more significant than previously thought and require a more comprehensive and coordinated policy response.

The negative outlook from Fitch follows a similar move by Moody’s Investors Service in December, highlighting the growing consensus among rating agencies about the risks facing China’s economy.

While financial markets initially showed little reaction to Fitch’s announcement, analysts warn that the downgrade could weigh on market sentiment in the near term, especially as investors await key economic indicators due to be released in the coming weeks.

China’s public debt has surged in recent years, fueled by government stimulus measures aimed at supporting economic growth and offsetting the impact of the COVID-19 pandemic.

With public debt nearing 80% of gross domestic product (GDP) as of mid-last year, according to the Bank for International Settlements, concerns about the sustainability of China’s debt levels have been mounting.

Despite these challenges, China’s sovereign bond market remains relatively insulated from external pressures, with foreign ownership accounting for a small fraction of total holdings.

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