02.09.2004 Business & Finance

Final decision on investment in Gas Pipeline Project in October

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Accra, Sept. 2, GNA - Dr Kwesi Nduom, Minister of Energy, on Thursday said the final investment decision on the proposed West African Gas Pipeline Project (WAGP) would be taken next month to allow for the construction phase in November.

He said the Heads of State and technical staff of the Ministry of Energy of the four participating nations - Ghana, Togo, Benin and Nigeria - had done a lot of work and this would not be allowed to go wayward.

Dr Nduom was speaking at the weekly press briefing in Accra to address the current petroleum situation.

The WAGP was started formally in 1995 with the signing of the Heads of State Agreement. The Project is a major one with the designated intent of delivering abundant Nigerian natural gas to commercially viable markets in Benin, Togo and Ghana, for them to meet potential energy demands.

The Project had been negotiated between the States and sponsors under the auspices of ECOWAS on a Build Own Operate basis.

Commenting on the ownership of the Pipeline, Dr Nduom said to date the project had been sponsored and funded by a consortium of six companies 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."

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.

The Project offers Ghana an opportunity for a sustainable, secured and reliable thermal energy supply for economic development.

The benefits the government and people of Ghana expect to derive from the completion of the project include long-term energy security through the provision of natural gas from Nigeria's Delta Basin and reduced cost of electricity generation through reduced fuel cost. Ghana hopes to receive over 640 million dollars from tax revenues and other direct benefits while making a cost saving of 600 million dollars over a 20-year period by moving from light crude oil to gas. Ghana's equity in the project will generate an expected net present value of over 85 million dollars to the state at 10 per cent discount rate.

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.

Chevron owns 36.7 per cent, Nigerian National Petroleum Company 25 per cent, Royal Dutch Shell 18 per cent and Volta River Authority 16.3 per cent. The rest are companies from Togo and Benin, which hold two per cent each.

According to WAPCO total direct tax payments to be received by the four participating countries would amount to 1,021 billion dollars, with Ghana receiving 643 million dollars. Benin would get 149 million dollars, Nigeria 94 million dollars and Togo 135 million dollars.

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