According to the Parliamentary Select Committee on Mines and Energy, the Gas Sales Agreement between the Ghana National Petroleum Corporation (GNPC) and the Genser Energy Ghana Limited resulted in savings for the nation of roughly $1.5 billion (GEGL).
The agreement calls for a 16-year supply of gas to the GNPC totaling 329 million metric British Thermal Units (mmBTU).
The agreement calls for a 16-year supply of gas to the GNPC totaling 329 million metric British Thermal Units (mmBTU).
The parliamentary investigation comes in response to complaints made by a few civil society organizations last year that the arrangement will cost the state money.
According to the committee's assessment, the nation would gain certain advantages from the sales deal after carefully examining stakeholder testimony.
IMANI Africa and the Africa Centre for Energy Policy (ACEP), two civil society organizations, claimed that Ghana purchased gas for $95.8 million and sold it to Genser Energy Ghana Limited (GEGL) for $43.5 million, causing the state to suffer a $1.5 billion financial loss.
The management of the GNPC and the Ministry of Energy were questioned by the Mines and Energy Committee of Parliament on the aforementioned gas supply agreement with Genser Energy, which IMANI Africa and ACEP had criticized.
As per a request from the Ministry of Energy, the sales agreement was signed in 2020 and revised in 2021.
In their testimony to the committee during its investigation, GNPC executives stated that the company had the option to purchase a principal pipeline for between $125 million and $145 million, plus an extra $54 million for a branch line.
Instead, the GNPC struck a contract with Genser Energy that gave them permission to contribute $170 million for a pipeline extension.
The GNPC then kept the privilege of providing free gas delivery to Kumasi via the new pipeline route.
The cost of funding a pipeline, in this case the Nyinahin-Kumasi pipeline, is determined by the differential in commodity prices.
The Genser Energy primary pipeline is available for purchase by the GNPC for $33.88 million, plus a suitable return.
As such, the committee posited that the claim that GNPC was losing $1.5 billion was based on confusion regarding the GEGL's Gas Discount Charge for shortfall payments and that keeping the GNPC-Genser deal actually resulted in a gain of $1.462 billion for the GNPC.
The committee found the computation methods used by the ACEP and IMANI faulty.
The contract price of $2.79/mmBTU was used by the CSOs to estimate a potential loss, however that figure included offsets from a $3.29/mmBTU capacity penalty.
According to the research, the arrangement also offered additional advantages like lowering carbon dioxide emissions, raising port revenue, generating employment opportunities, and prolonging the lifespan of mines.
According to the article, the agreement would allow the GEGL to increase the scope of its operations in Ghana, resulting in more job possibilities for Ghanaians.
A private corporation in Ghana called The GEGL offers gas supply and electricity generating solutions.
It runs multiple power plants and gas pipelines throughout Ghana and has made investments totaling over $980 million there.
John Abdulai Jinapor, the committee's ranking member, disagreed with the committee's conclusions and asserted that the agreement would cause the state to suffer considerable losses.
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