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Business News Wed, 22 Jan 2003

West Africa Gas Project On Course

Mr. Kofi Asante, Executive Secretary, Energy Commission says despite the financial constraints hindering the implementation of the West African Gas Pipeline Project (WAGP), the other procedures for the project to take off are on course.

"We have now reached the definitional phase which involves commercial/legal structures, planning and environmental impact assessment and concessional arrangement. This phase is of crucial importance because the governments of Ghana, Nigeria, Benin and Togo will have to take the final investment decision with respect to the project."

Mr. Asante said this at a pre-seminar press briefing in Accra to brief the press on the seminar, which is scheduled for today at the Labadi Beach Hotel.

The seminar, which is being jointly organised by the Energy Commission and the Ghana Institute of Economic Affairs, is to engage civil society in discussion of the project before it is passed on to parliament for further scrutiny.

The project has five phases: the conceptional, the feasibility, the definitional, the constructional and the operational phases.

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WAGP is an initiative of the Economic Community of West African States (ECOWAS). In 1995 a contractual agreement was signed between the Heads of Government of Ghana, Togo, Benin and Nigeria to undertake a US$500 million cross-border pipeline project to transport natural gas from Nigeria to the three countries. The project would cover about 800 kilometres with an initial capacity to transport about 160 mmsfcd of gas growing to about 500 mmsfcd within 20 years.

Mr. Asante said in Ghana when the project is completed, it would be handed over to the Volta River Authority (VRA) to generate electric power from it for both commercial and domestic use.

He said this would lessen the demand on VRA for both thermal and hydro energy. He said Ghanaians domestically consume over 60% of power generated by VRA.

He said acceleration of regional integration, economic growth and development in West Africa, provision of lower cost and a catalyst to stimulate direct foreign investment in West Africa among others are benefits of the project. The West African Pipeline Company (WAPCO) is to construct, own and operate the pipeline. The company is a partnership formed between Chevron, Shell, Nigeria National Petroleum Company - 79.35, Ghana (VRA) - 16.3%, Togo (STC) - 2.0%, Benin (SBG) - 2.0% and undistributed 0.4%.

He said, "large amounts of natural gas are being wasted in Nigeria in flares constituting greenhouse gases. Electricity generation capacity in Ghana is in dire need of cheap fuel sources."

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In a related development, the BBC reports that Nigeria Liquefied Natural Gas (NLNG) has won a loan totalling $1.6bn from a multinational consortium of 26 banks - mostly from Europe and the United States - in December 2002.

The signing ceremony in Abuja covered the first $160m of loans from Nigerian banks. The bulk of the money is due to be released after a second ceremony in Paris today, a company spokeswoman said.

The loans are part of a $2bn project being undertaken by Nigeria LNG to reduce the amount of gas wasted by oil producers who burn off gas at drilling sites.

"It's a complex, highly technical business, but one that can produce the rewards in the long term. It's not a short-term business," said NLNG managing director Andrew Jamieson.

Toyin Aderi-no-kum, who heads Guarantee Trust Bank, said the transaction had tested Nigerian banks, adding that he was confident "transactions after this will give larger chunks for the Nigerian banks".

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He said NLNG was viewed as a "first class" client by the banks.

"We honestly don't see any risk of defaulting here."

The firm's previous plants have been entirely financed from shareholders rather than through banks.

Nigeria LNG is jointly owned by Shell, TotalFinaElf, Agip and the state-controlled Nigerian National Petroleum Corporation.

Source: Accra Mail