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The rolling power cuts, christened Dumsor, has worsened because gas supply from Nigeria’s N-Gas has dropped drastically and the Volta River Authority (VRA) has no money to buy Light Crude Oil (LCO) to power dual fuel thermal plants in the Tema Power Enclave.

Sources told The Finder that, currently, Nigeria’s N-Gas supplies an average of 35 million standard cubic feet of gas a day and it is being used by Sunon Asogli Power Plant to generate about 300 megawatts from its combine cycle.

With a deficit of 600 megawatts facing the country, four other plants with combined capacity of 340 megawatts are lying idle in the Tema Power Enclave because of lack of gas from Nigeria and VRA’s inability to buy LCO.

The plants are Tema Thermal Power Plant (TT1) with capacity of 110 megawatts, the 50-megawatt Tema Thermal Power Plant (TT2), 100-megawatt Cenit Power Plant, and Mines Reserve Plant with the capacity to generate 80 megawatts.

Apart from the 50-megawatt Tema Thermal Power Plant (TT2), which uses only gas, all the others are dual fuel that uses either gas or LCO.

If N-Gas supplies the 120 million standard cubic feet of gas a day, as contained in the contract, it would be enough to power all the plants in the Tema Power Enclave.

Even though N-Gas claimed it has problems at its production site, power sector sources suspect that may not be the truth.

Sources told The Finder that ever since Ghana reached an agreement to pay N-Gas the balance of $171.5 million between November 2015 and February next year, gas supply from N-Gas averages 35 million standard cubic feet a day.

They noted that in the agreement with Ghana to pay the outstanding debt, N-Gas demanded that full payment be made for fresh gas to be supplied while the debt is cleared.

However, VRA, which owed banks to the tune of over $1.3 billion, has not been able to make full payment for the fresh gas supplied, and sources believe it is for this reason N-Gas is unwilling to increase supply.

For example, gas supplied for September 2015 amounted to $18 million but VRA was able to pay $12 million, leaving a balance of $6 million.

Available power generation are Akosombo - 520 megawatts; Takoradi Thermal Plants - 600 megawatts; Sunon Asogli Power Plant - 300 megawatts; and Bui Dam - 100 megawatts.

Bui Dam comes on-stream during peak hours to augment what is produced.

N-Gas issued VRA a deadline up to ending of February 2016 to clear its outstanding debt of $171.5 million.

In October, VRA paid $9.5 million out of the $181 million debt for gas supplied from August 2014 to August 2015.

This means the balance to be paid is $171.5 million.

The $171.5 million is to be paid in three tranches from this month to ending of February 2016.

The debt covers gas supplied to VRA and the cost of supply and transportation of the gas from Nigeria to Ghana.

As of July this year, VRA owed banks to the tune of over $1.3 billion, and it will be very difficult for VRA to secure a loan from any bank in Ghana to pay its debt to N-Gas.

This means the Government of Ghana, which is the 100% owner of VRA, will have to look for money to bailout VRA to ensure that N-Gas does not cut supply to Ghana.

Ghana gets about 25% of power through gas from Nigeria, which flows through the West African Gas Pipeline via Benin and Togo, and the threat by N-Gas to reduce volumes by 70% would have raised the cost of supply.

VRA’s power generation problems are a sign of the budgetary stress facing Ghana, a country that is following an International Monetary Fund programme to restore fiscal balance.

VRA stopped paying its bills in August 2014. Prior to that, VRA had been borrowing money from Ghanaian banks at high interest rates to fund the payments, resulting in over $1.3 billion debt owed the banks.

The power crisis stems from a fall in supply from hydro sources, government underpayment to the Electricity Company of Ghana, residents’ illegal consumption, and tariffs too low for VRA to recoup its costs.

N-Gas is a company jointly-owned by Nigerian National Petroleum Corporation (NNPC), Shell Petroleum Development Company (SPDC) and Chevron Nigeria Limited.

The company, which is jointly owned by Shell, Chevron and the NNPC, buys gas from oil companies in Nigeria and transports the gas to its customers in Benin, Togo and Ghana through the $1 billion WAGP, which is operated by the West African Gas Pipeline Company (WAPCo).

The International Project Agreement (IPA) signed in May 2003 by WAPCo and the governments of Benin, Ghana, Nigeria and Togo, with the secretariat of the Economic Community of West African States (ECOWAS) as witness, provides that N-Gas be allocated a space in the pipeline that could transport up to 200 million standard cubic feet of gas per day.

WAPCo is owned by Chevron West African Gas Pipeline Ltd (36.9%); Nigerian National Petroleum Corporation (24.9%); Shell Overseas Holdings Limited (17.9%); Takoradi Power Company Limited (16.3%), Societe Togolaise de Gaz (2%); and Societe BenGaz S.A. (2%).