The Parliamentary Select Committee on Mines and Energy has announced that Ghana saved approximately $1.5 billion through the Gas Sales Agreement involving Genser Energy Ghana Limited (GEGL) and Ghana National Petroleum Corporation (GNPC).
The contract was established to provide 329 million metric British Thermal Unit (mmBTU) of gas to GNPC over a 16-year period.
The Parliamentary Committee indicated that the sales agreement will additionally reduce transmission losses by around $480 million, particularly when the Ameri plant is relocated to Kumasi and becomes operational.
The report by the committee follows criticisms from civil society organizations in the previous year, asserting that the agreement would result in financial losses for the nation.
Civil society groups, including IMANI Africa and the Africa Centre for Energy Policy (ACEP), alleged that Ghana purchased gas for $95.8 million and sold it to Genser Energy Ghana Limited for $43.5 million, resulting in a $1.5 billion financial setback for the state.
According to the Committee’s report, which evaluated inputs from various stakeholders, the country stands to gain several advantages from this sales agreement.
This sales agreement was initially signed in 2020 and later amended in 2021 following a directive from the Ministry of Energy. After nearly a year-long investigation, the parliamentary committee’s report concluded that the GNPC-Genser Energy sales agreement could present a more economical and environmentally friendly alternative to diesel for industries, potentially stimulating economic growth.
GNPC officials revealed during the committee’s inquiry that the GNPC had the option to purchase a primary pipeline at a cost ranging between $125 million and $145 million, with an added $54 million for a branch line.
Instead, the GNPC entered an agreement with Genser Energy, allowing them to invest $170 million for a pipeline extension.
The committee also clarified that the notion of GNPC facing a $1.5 billion loss was based on misreporting concerning GEGL’s Gas Discount Charge for shortfall payments. It was concluded that the GNPC-Genser deal actually yielded a profit of $1.462 billion for GNPC.
The committee discovered errors in the calculation methods used by ACEP and IMANI. These organizations computed a hypothetical loss using the contractual sum of $2.79/mmBTU, which did not consider offsets from a capacity charge of $3.29/mmBTU.
The report highlighted further benefits from the agreement, including decreased carbon dioxide emissions, increased port revenue, job creation, and extended mine life. The committee also noted that the deal would enable GEGL to expand its operations in Ghana, leading to more employment opportunities for citizens.
GEGL is a private company established focusing on power generation and gas supply solutions in Ghana, has invested over $980 million in the country and operates various power plants and gas pipelines.
The Committee further emphasized the need and recommended peaceful cooperation between the entities involved in the deal.
“This does not call for a turf war and the agency heads should refer the controversial matters involved in this State institution and private sector partnership to the Minister for Energy, the referee, for resolution. Any petty rivalry in relation to the generation of power would be detrimental to the nation.”