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17.01.2006 Business & Finance

WAPCC calls for investor friendly regulations

By GNA

Accra, Jan. 17, GNA - Mr Daniel S. Hamer, General Manager of the West Africa Gas Pipeline Company (WAGPCO), on Tuesday called on the Government to expedite action on the institution of investor friendly regulations to attract investors to establish Local Distribution Companies (LDCs) for the secondary gas market in Ghana.

He said the Company was working hard to meet the December 2006 deadline for bringing on line the West Africa Gas Pipeline (WAGP), but there were still no LDCs to establish a secondary network to distribute gas to industrial and commercial users.

This, he said, was because the Government had not yet published any regulations that would engender investor confidence in the Project. Mr Hamer made the call at the Second Stakeholders forum on natural gas market for Ghana organized by the Ministry of Energy and its collaborators to present a draft policy on the WAGP to seek the input of stakeholders to inform the final policy document.

He said at this point Volta River Authority (VRA) and its counterparts in Togo and Benin, CB Togo and CB Benin, respectively, remained the primary market sources for the gas fuel when the project was completed.

Mr Hamer said the construction of a Regulation and Measuring (R and M) facility at Tema to serve the secondary market was still pending. "I know of at least three potential investors interested in the LDC project but they need to be sure that their investments are secured and potentially profitable. At this point we still do not have that and that is not too good for this country."

Mr Hamer expressed optimism in the viability of the WAGP, saying that the fact that demand for gas fuel in the West African Sub-Region was higher than its supply, coupled with the recent fast pace of development in the area, there was a potential big market for gas fuel. "The Government needs to understand that this is an international project and investors would only put their money where they have the best offer in terms of security and profitability.

"Togo and Benin have not yet taken any initiative on regulations but Ghana has and it needs to move fast and stake its place in the market."

Elaborating on the progress of the WAGP project, he said so far 262 kilometres of gas pipeline had been laid offshore out of 567 kilometres needed. Laying of pipes would be completed by July this year.

He said WAPCO was sourcing gas from various locations in Nigeria and was sure that it could find over 200 years of gas supply from its sources to meet the high demand over a long period of time.

Mr Hamer said the Company would sell its gas to the primary distributors at a price 50 per cent less than what they paid for liquid fuel, adding that VRA in particular would save a significant part of its fuel cost, estimated to run into hundreds of million of dollars.

He said the technical and safety risks associated with the projects were minimal and not comparable to the financial risk for potential investors, which still hanged in a limbo due to non-existence of investor friendly regulations.

Mr Hamer said the Company maintained a culture and practice of providing compensatory development projects such as schools, hospitals, roads and other things for communities adversely affected by the Project.

Professor Mike Ocquaye, Minister of Energy, agreed with Mr Hamer saying that secondary networks (LDC) were needed because the potential industry, commercial and other uses were located outside the site where the gas would be landed.

"If the implementation of the systems delays, the country risks lost opportunities and possible competitions from the other participating countries for the capacity allocated in the pipeline for industrial development."

He said consequently, huge sums would be lost in Industrial Development Tariffs (IDT), since it was this capacity that attracted the IDT.

Prof. Ocquaye noted that the LDC network would also increase the gas volumes consumed and, therefore, impact positively on the cost of landed gas.

He said he was happy that the WAGP Project was on course, adding that it was good news for the public since it would cut down on the use of liquid fuel, which was more expensive and environmentally unfriendly. Prof. Ocquaye said work on the construction of the Tema line that would bring the gas to the R and M station would commence within the next couple of weeks when the equipment for the works arrived in Ghana.

He outlined volumes of studies that had been done to inform the policy document and also to provide vital information for would-be investors for the assessment of the commerciality of the secondary gas market within and without the vicinity of the R and M station.

Mr Michael Kweku Agyapong from the Ghana Investment Promotion Centre (GIPC) promised potential investors of sustained political stability, investor friendly regulations and laws contained in the GIPC Act (Act 478), availability of skilled labour in Ghana and the existence of adequate developmental infrastructure to make their investment worth their while.

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