Ghana, 3 Others to Earn $600m From Gas Project Energy

Ghana and three of its neighbours involved in the West African Gas Pipeline (WA-GP) project will earn a minimum tax revenue of $600 million from the project.

The project has a 20-year life span.


The three countries are Nigeria, Togo and Benin Republic. The WAGP entails the supply of natural gas from Nigeria's oil fields to the three countries.


The West African Pipeline Company (WAPCo), formed by the four countries to build, own and operate the gas pipeline project, said in Lagos at the weekend that other benefits that will accrue to the countries include regional economic development and enhanced electricity infrastructure expected to stimulate private investment.


Other benefits of the project, according to the company, are accelerated regional economic integration, additional export market for Nigeria's natural gas, job creation, especially during construction, and aiding Nigeria's gas flare programme.


"By substituting cleaner fuels for oil in electricity generation in Benin, Ghana and Togo, the project will also help to reduce emission of greenhouse gases in the region," WAPCo noted, adding that 85 percent of the gas will be utilised for electricity generation while the remaining 15 percent will be for industrial development.

The project, which will cost about $500 million and billed to come on stream mid 2005, involved the laying of 681 kilometers of pipeline (largely offshore) from Lagos to Takoradi in Ghana. The pipeline will have initial capacity of 190 million standard cubic per day, with the potential of expansion to 450 million.


The project promoters appointed a consortium of private and public companies as project developers. They are ChevronTexaco which holds 41.87 percent in the project, the Nigerian National Petroleum Corporation (NNPC), 25.25 percent and Shell, 16.5 percent.


Others are the Volta River Authority of Ghana, 16.38 percent, SoToGaz of Togo and Benin's SoBeGaz.


WAPCo held an educational seminar on pipeline safety for stakeholeders in the project, in Lagos at the weekend. A similar enlightenment programme was held recently in Ghana.


It said the Environmental Impact Assessment (EIA) of the project would soon be completed, while public hearing on the study will be held in next January.

WAPCo said that the packages for the front end engineering design (FEED) of the pipeline had been submitted while the Final Investment Decision (FID) for the project is expected to be signed in March 2004.


The World Bank has fully backed the project and is funding the preparation of the economic and financial assessment of the project. The bank in an earlier study, estimated that Benin, Togo and Ghana could save nearly $500 million in energy costs over a 20-year period.


The project has received administrative support from the ECOWAS Secretariat and technical assistance ($1.55 million) from the United States Agency for International Development (USAID).


In June 2002, a gas supply agreement for Ghana's Takoradi power plant was signed. The gas is expected to significantly reduce boiler-fuel costs at Takoradi by substituting gas for oil.


In February 2003, the four nations signed an agreement on the implementation of the WAGP. The treaty provides for a comprehensive legal, fiscal and regulatory framework, as well as a single authority for the implementation of the project.