The Africa Centre for Energy Policy (ACEP) says government will accumulate more debts if it does not put in place the appropriate gas infrastructure to accommodate the Offshore Cape Three Points (OCTP) gas production agreement.
According to ACEP, it was reliably informed that the $100 million security package provided in the Escrow Reserve Holding Account (ERHA) had already been encumbered by the private parties.
It said the government has also defaulted in paying for gas under the take-or-pay agreement ever since gas production was commissioned.
“If the escrow is not replenished in time, other guarantees will be the next target. The partners will be forced to draw down on the World Bank Guaranteed Letter of Credit of $500m financed by HSBC and Standard Charted Bank of which Ghana National Gas Corporation (GNPC) has 12 months to pay. This means GNPC shall incur more debt and failure to pay within the stipulated time will result in accumulation of debts and interests payable by the nation.”
It said the $7.7 billion OCTP Project came with certain guaranteed payment securities to ensure that the Sankofa Partners were able to recoup their investments, with the first tier of such payment securities being a designated gas sales account to be drawn by the partners.
“That in a situation whereby the receipts of the gas sales are inadequate, the partners will draw their payments from an Escrow Reserve Holding Account (ERHA), a buffer account which is supposed to contain 4.5 months of estimated gas revenue of $191.95 million. The GNPC could only provide $100 million into the escrow.”
The monetary value of the currently deferred 111 mmscf of gas per day is approximately $28 million per month.
According to ACEP, the OCTP oilfield project and its subsequent gas production present Ghana with an opportunity to improve power generation to spur economic growth and development.
However, the delays in establishing appropriate infrastructure to benefit from the project have led to financial implications which the government has sought to address with short-term but costly measures.
“If the government of Ghana would speed up infrastructure delivery to take the gas, much of the financing challenges would be addressed. In the meantime, VRA must pay for the gas it utilizes, while GNPC replenishes the escrow account to prevent partners from resorting to World Bank guarantees.”
Source: Daily Guide
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