The Africa Centre for Energy Policy (ACEP) is questioning government’s plan to deploy two Liquefied Natural Gas projects simultaneously.
According to ACEP, the plan for the double deployment of the Quantum Power and West African Gas Limited Project, will put undue pressure on the public purse.
In an advisory report after a cost benefit analysis of both projects, ACEP said the Quantum Power project is more economically viable and should be chosen over the West African Gas Limited project. “We are alarmed that government is considering the deployment of two LNG projects at the same time which together will provide a re-gasification capacity of more than 500 million standard cubic feet of gas. These projects are the West African Gas Limited project and the Quantam power project. ACEP is of the view that considering the size of Ghana’s power sector challenges and the contributions of uninterrupted power to industrialization and the general economic development of the country, both projects are important for Ghana. However we do not support the deployment of the two projects at the same time as that will undermine value for money, impose undue burden on government and the people of Ghana. “Between the two projects, it is our considered opinion that the Quantum power project provides comparative economic justification to be selected. The incentives given to WAGL cannot be justified when the alternative is better, respects Ghanaian regulations and operates in existing frameworks, no government guarantees, lower user fees and ultimately a transfer of infrastructure to the state through GNPC in a billed operate owned transfer arrangement.” ACEP further argued that, “although Ghana needs LNG to supplement indigenous gas, Ghana’s gas market though expected to grow, will still not be large enough for 2 FSRUs serving the Tema power enclave. Therefore, value for money for Ghanaians will be compromised if the two projects are implemented at the same time.” It therefore suggested that there should be “an urgent choice between the two projects in terms of value for money, feasibility and the pursuit of the national interest,” adding that “ Parliament must also consider the comparative value of the two projects before any consideration and ratification of any of them.” The project is expected to provide about 250 million standard cubic feet of gas per day.
Meanwhile the Chief Executive Officer (CEO) of the Ghana National Petroleum Corporation (GNPC), Mr Alex Mould, earlier on hit back at critics who called for his dismissal for providing guarantee for the Quantum Power project among others.
Some workers of the company and some industry players petitioned the President, John Mahama, to fire the GNPC boss over his decision to sign onto the deal. But Alex Mould justified his decision to invest in the project, saying “The bottom line is the GNPC has to dispose of its gas; GNPC has to ensure that the value chain that is going to ensure that we get paid is a value chain that is working and sustainable, currently it is not. So the GNPC has to be involved in ensuring that happens otherwise for sure, we will not be paid for our gas.” Mr. Mould added, “This is an integral part of our strategy to become an enabler in the various sectors that we are playing in to ensure that the whole value chain becomes sustainable otherwise GNPC will be losing revenues.”
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