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Nigeria defers threat to stop gas flow to Ghana

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World Pipelines,

Due to negotiations and government delegations, the West Africa Gas Pipeline Company (WAPCo) has postponed its decision to cut gas supplies to Ghana.

Ghana's gas supply

Ghana obtains approximately 25% of its power supply through gas from Nigeria, which is transported through a pipeline via Benin and Togo. Nigeria Gas’ (N-Gaz) threat of cutting the gas – reducing volumes by 70% – would have raised the cost of supply.

President John Mahama's Government is also bearing the brunt of this issue, as the upcoming election in 2016 is said to be closely fought. As a result, Mahama has promised to stop the electricity cuts by early 2016; Kwabena Donkor – Minister for Power – has also stated that should the problem not be dealt with and resolved, he will resign.

In an interview with Reuters, Harriet Wereko-Brobby – spokeswoman for the pipeline company – stated: "By next week we are expecting a way forward. There appears to be a will by all the parties to resolve the issue without the flow of gas being cut off.” Wereko-Brobby continued to state that the government had paid N-Gas US$10 million; the Volta River Authority (VRA) owes the company US$103 million.

Ghana's economic problems

Ghana – despite its exports of gold, cocoa and oil – was thus hit hard economically. The problems being faced have the potential to stem from budgetary stress; to fund the payments, Ghana had been borrowing money from numerous banks at high interest rates. VRA halted its financial assistance in August 2014, and – at present – Ghana is partaking in an International Monetary Fund programme to restore its fiscal balance.

Ghana intends to resolve its economic issues by increasing its domestic gas production, in the long-run. World Bank Group President, Jim Yong Kim, stated: "We are very supportive of President Mahama's current reform strategy. We think he's now making the hard decisions to get Ghana back on the path of growth.”

Edited from various sources by Stephanie Roker

Sources: Reuters, Voice of America, GBC, All Africa

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