Ghana to host forum on secondary gas market

Accra, Jan. 13, GNA - Ghana is to host a second stakeholders forum next week on the full utilization of her natural gas market which would be available when the West African Gas Pipeline (WAGP) Project comes on stream in December 2006.

The stakeholders, notably the Energy Commission, Public Utility Regulatory Commission, bulk users, multilateral donors, major industry and other end users, would consider the various uses of natural gas. In addition, they would consider the use of natural gas for power generation, fashion a regulatory and legal framework for a local gas distribution company to be established.

A source at the Ministry of Energy explained to the Ghana News Agency Business Desk in Accra, that a secondary natural gas market was conceived at the inception of the WAGP Project to enable Ghana to carry additional gas, that was over 15 per cent of the pipeline's throughput and not dedicated to the foundation customers (financiers of the project) for power generation.

Key strategic projects envisaged to benefit from the successful development of the secondary gas network include mining and processing of bauxite at Nyinahin, Tarkwa Manganese Project (production of electrolytic manganese dioxide); iron and steel manufacture in Takoradi, limestone mining and clinkerization at Buipe and salt recovery and allied process at Tema.

The source noted that the projects used large amounts of energy and had the potential to offer huge benefits to the nation, but their eventual take-off was largely contingent on the availability of cheap and reliable energy.

"When developed successfully, the vibrant local gas market will offer a number of economic and environmental advantages to the country." The most critical element in developing a secondary gas market is the formation of a single distribution entity, which would act as a Local Distribution Company (LDC), distributing gas to individual customers.

Although some companies have expressed interest in the venture, no LDC has been formed or chosen yet nor has any policy been put in place to allow a secondary market to function with any degree of success. "This virtually requires, therefore, that the group of all non-VRA users, mainly industrial and commercial establishments, to be served by a single administrative and operating off-taker, would procure and distribute gas to these individual customers," the source noted. Policy issues to be put before the forum, the GNA found out was the nature of organizational chain linking local gas distributing company to the end users and if Ghana should opt for a bundled or unbundled service.

"That is to say if Ghana should opt for only one distribution and marketing company or two."

Other policy issues would be standards with respect to technical specifications for plant, equipment, health, safety and natural environment and which secondary market should be developed initially.

It would also discuss if the gas distributing entity be a governmental or private establishment and if it should have an exclusive right to build and operate the network in its zone of operation. The United States Agency for International Development (USAID) under its Trade and Investment Programme for a Competitive Export Economy (TIPCEE) is assisting the Ministry of Energy to develop a roadmap to the development of the secondary gas market.

They are also assisting the PURC and the Energy Commission to develop tariff methodology and performance standards to regulate the market.