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Ghana Owes $160m for Gas Supply from Nigeria

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Gas Plant
  • 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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Economy

Nigeria’s Plan to Review Oil Companies’ Gas Flaring Strategies

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Oil

Nigeria is ramping up its efforts to address environmental concerns in the oil and gas sector with a comprehensive plan to review gas flaring strategies of international and indigenous oil companies.

The Minister of State for Environment, Dr. Iziaq Salako, announced this initiative during a national stakeholders engagement meeting on methane mitigation and reduction held in Abuja, Investors King reports.

Gas flaring, a common practice in the oil industry, releases methane—a potent greenhouse gas—into the atmosphere, contributing to climate change and posing health risks to communities near oil facilities.

Nigeria aims to end routine gas flaring by 2030, aligning with global climate goals and commitments.

Dr. Salako explained the importance of reducing methane emissions and highlighted the detrimental effects on public health, food security, and economic development.

He outlined practical steps being taken to tackle methane emissions, including the development of methane guidelines and the engagement of government institutions.

The ministry, through the National Oil Spill Detection and Response Agency, will conduct periodic reviews of oil companies’ plans to ensure compliance with the gas flaring deadline.

Deloitte management consultants will assist in conducting comprehensive forensic audits to scrutinize the legitimacy of forward-contracted transactions.

President Bola Tinubu’s commitment to environmental sustainability underscores the government’s dedication to addressing climate change and fulfilling its multilateral environmental agreements.

The engagement event served as a platform for stakeholders to discuss methane mitigation strategies, existing policies, and implementation challenges.

Collaboration and dialogue among diverse sectors are crucial in charting a unified course towards sustainable methane reduction in Nigeria’s oil and gas industry.

As the country navigates its environmental agenda, ensuring accountability and transparency in gas flaring practices remains paramount for achieving a greener and healthier future.

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Economy

Interest Rate Jumps to 24.75% as CBN Takes Aggressive Stance Against Inflation

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Dr. Olayemi Michael Cardoso

The Central Bank of Nigeria (CBN) has announced a significant increase in the monetary policy rate, known as the interest rate, to 24.75%.

This move disclosed by CBN Governor Olayemi Cardoso during the 294th Meeting of the Monetary Policy Committee press briefing in Abuja, represents a bold step by the apex bank to address the mounting inflationary pressures faced by the country.

With inflation soaring to 31.70% in February, the CBN aims to moderate this upward trend by tightening its monetary policy stance.

This decision follows the previous hike in the interest rate to 22.75% in February, showcasing the CBN’s commitment to combatting inflationary forces.

While the bank opted to maintain the Cash Reserve Ratio at 45%, the significant increase in the interest rate underscores the urgency of the situation and the need for decisive action.

Governor Cardoso emphasized that these measures are essential to stabilize the economy and safeguard the purchasing power of the Nigerian currency.

The 294th MPC marks the second meeting under Governor Cardoso’s leadership, indicating a proactive approach to addressing economic challenges.

The next MPC meeting is scheduled for May 20th and 21st, 2024, highlighting the ongoing commitment of the CBN to navigate Nigeria’s economic landscape amidst inflationary pressures.

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Economy

Nigeria Braces for 10th Consecutive Interest Rate Hike by Central Bank

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Central Bank of Nigeria (CBN)

As Nigeria grapples with persistently high inflation, the Central Bank of Nigeria (CBN) is gearing up to implement its tenth consecutive interest rate hike in a bid to curb the soaring prices and attract investment.

Analysts surveyed by Bloomberg are anticipating a substantial 125 basis-point increase in the key rate to 24%, marking one of the most significant adjustments in the current tightening cycle.

The decision, expected to be announced by Governor Olayemi Cardoso on Tuesday at 2 p.m. in Abuja, comes on the heels of inflation accelerating to 31.7% in February, far surpassing the central bank’s target range of 9%.

This surge has been primarily attributed to the sharp depreciation of the naira, prompting authorities to devalue the currency twice since June to narrow the gap with the unofficial market rate and encourage investor confidence.

While these measures have seen the naira strengthen in recent days and bolstered investment inflows, including a fourfold increase in overseas remittances and significant foreign investor portfolio asset purchases, there remains a palpable need for more decisive action.

Giulia Pellegrini, a senior portfolio manager at Allianz Global Investors, emphasized the necessity for the CBN to intensify its tightening efforts to regain foreign investors’ confidence in the local bond market.

While acknowledging the positive strides made by the central bank, Pellegrini stressed the importance of a more assertive approach to prevent the diversion of investor attention to other frontier markets.

As the Nigerian economy navigates through these challenging times, the impending interest rate hike signals the CBN’s determination to address inflation head-on and foster a more stable economic environment.

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