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31.08.2004 Business & Finance

Gas Pipeline Project is on course - Nduom

By GNA

Accra, Aug. 31, GNA - Dr Kwesi Nduom, Minister of Energy, on Tuesday said the West African Gas Pipeline Project was on course and the World Bank Board would soon be in Accra to present economic and technical details on the project.

This would be followed by the approval of the Project, including guarantees, so that in November the groundbreaking ceremony would take place to signify the actual start of the project.

Briefing the Ghana News Agency Business Desk in Accra, Dr Kwesi Nduom said the World Bank had been doing its independent assessment of the Project.

The Energy Minister said the West African Gas Pipeline Project (WAGP) would reach the definitional phase by October when the Final Investment Decision Point would be reached.

Dr Nduom's comments come in the wake of criticisms of the Project by Mr Kofi Asante, Chief Executive of the Energy Commission, who had sought to create the impression that the Agreement was not favourable to Ghana. Mr Asante had also said Ghana was certain to lose out since it would neither be owning the pipeline nor the company operating the project.

The 678-kilometre WAGP valued at 517 million dollars is a regional energy infrastructure project for West Africa, which is expected to reduce the cost of fuel and emissions in the region.

Dr Nduom said the enabling legislation to the Project had been drafted and was being reviewed for Cabinet to be sent to Parliament for approval.

Commenting on the ownership of the Pipeline, Dr Nduom said to date the project had been sponsored and funded by a six-company consortium known as the Commercial Group.

"A comprehensive shareholders agreement for West African Pipeline Company (WAPCO) has been executed, under which each member of that company has ownership entitlements in WAPCO," he said.

"Final ownership of WAPCO would depend on the participants making the necessary capital investments, which are provided for in that agreement."

Chevron, NNPC, Royal Dutch Shell and Volta River Authority currently own 36.7 per cent, 25.0 per cent, 18 per cent and 16.3 per cent (96 million dollars). The rest are companies from Togo and Benin, which hold two per cent each.

On the open access and transportation agreements, Dr Nduom said under the International Partnership Agreement signed in Cotonou in 2002, it was agreed that the WAGP would in due course become an open access pipeline system and a comprehensive access code was to be agreed between WAPCO and the WAGP Authority prior to the commencement of construction.

"... Any gas produced in Benin, Togo or Ghana will have open access available from the outset. In addition, there are other exceptions, which will permit open access if the producers are not willing to sell gas at or below a reference price."

"Where open access does not apply, only gas produced by the Nigerian gas producers who are affiliates of shareholders can obtain access to the pipeline."

The Access Code would be amended from time-to-time by agreement between WAGP Authority and WAPCO.

According to WAPCO total direct tax payments to be made amounted to 1,021 billion dollars, with Ghana contributing 643 million dollars. Benin will pay 149 million dollars, Nigeria 94 million dollars and Togo 135 million dollars.

Ghana is estimated to save 610 million dollars, Togo 58 million dollars and Benin 109 million dollars.

Dr Nduom said everything was being done to ensure the commencement of construction operations for the first delivery of gas by end of the second quarter of 2006. 31 Aug. 04

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