Thursday, May 10, 2012

How Nigeria is Undermining Ghana's Electricity, and Way Forward for WAGPO?

This morning, a neighbour was kind enough to drop me off at work. Our conversation along the way revealed that he has significant insights into our electricity problem (generally a problem of distribution; generation; and transmission -- and not necessarily in that order all the time!).


The most shocking insight, however, had to do with Nigeria and how it continues to undermine the West African gas pipeline project, which it is a part of. The WAGP is an ECOWAS-supported project to transport natural gas from Nigeria to customers in Ghana; Togo; and Benin. Earlier in the year, one of the reasons for the load-shedding had been ascribed to the shortage of gas by Nigeria to the WAGP. They have a website, which can be found here: http://www.wagpco.com/. Sadly, the information is not as updated as regularly as one would have hoped. 


What we do know is that in an effort to contain the problem of Nigeria's inability to supply gas, ameeting was held earlier in the year. The organisers set up the West African Gas Market Development Committee (WAGMDC), which is primarily made up of representatives of World Bank, WAPCo, ECOWAS and WAGPA. This committee will facilitate meetings amongst buyers and sellers of gas, determine market requirements and through advocacy gain sub regional government support to foster  gas market development strategies (from: http://www.wagpco.com/index.php?option=com_content&view=article&id=150%3Awagsef-rallies-support-for-sub-regional-gas-development&catid=59%3A2012-news&Itemid=135&lang=en).


Now, the reason for the sabotaging of the gas also has a lot to do with the fact that, as the neighbour inferred, Nigeria has a lucrative deal exporting its gas to Europe, which is embattled because of the fiscal crisis.  This article (Banks Battling European Debt Crisis Lose on African Deals: http://www.bloomberg.com/news/2012-05-07/banks-battling-european-debt-crisis-lose-on-african-deals.html) is a testament of the crisis-ridden Europe and how the continent is scrambling for opportunities in Africa in every nook and cranny.


Suffice-to-say, there has been little explanation of this development in the media. The Ghanaian press did talk about the lack of gas from Nigeria through the WAGP. However, an interesting article in Nigeria's Business Day is perhaps the best source so far that suggest Nigeria may be up to no good.


Here are some juicy quotes:

  • In furtherance of its expansion plans, Oando Gas and Power, late last year entered into agreement with the United States Trade and Development Agency (USTDA) to jointly fund a feasibility study toward the development of an interstate natural gas transportation pipeline from the Excravos-Lagos Pipeline System to other southwest states
  • For Oando Gas and Power, Nigeria’s leading indigenous developer of gas and power solutions and one of the companies actively involved in the actualisation of the Nigerian Gas Master Plan, the Federal Government’s initiative is a reinforcement of its robust energy programme meant to provide a home-grown solution to Nigeria’s energy crisis
  • With the country’s proven gas reserve base of 187 trillion cubic feet and a further undiscovered potential of 600 trillion cubic feet, Nigeria is positioned to accelerate industrialisation on the back of massive utilisation of gas, thereby creating jobs which will in turn lead to political stability and security
  • the development was in line with the current drive by the Nigerian National Petroleum Corporation (NNPC) to boost domestic gas supply under the Nigerian Gas Master Plan
  • BusinessDay’s investigation reveals that Oando Gas and Power is currently developing a Compressed Natural Gas (CNG) facility in Lagos. The CNG facility will deliver natural gas in compressed form, bottled in huge cylinder vessels to customers that wish to adopt natural gas as fuel but are outside the gas pipeline coverage. It will also be used to serve customers that have been unable to connect to the gas pipeline grid due to inability to meet the cost of pipeline connection
Now there is nothing wrong with Nigeria developing its domestic capacity on gas. If Ghana can supply Togo with both water and electricity and Ghanaians have accepted it as fostering cooperation and integration, I do not understand why Nigeria might not see same benefits. I do not want to malign Nigeria, but this revelation is too juicy to leave to oneself. 

I am all for ECOWAS and regional integration, but if Nigeria chooses to pretend to cooperate with its neighbours when it's doing something else, I believe member states should advise themselves. A way forward on this specific development could be WAGP members calling for Nigeria to shape up or ship out. 

I foresee tremendous problems up ahead--no pun intended-- in the pipeline!
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