In July 2022, Genser Energy Ghana Limited (“GEGL”), a licensed IPP, announced that it had secured funding to undertake various gas midstream projects in Ghana, including a 100km natural gas pipeline to Kumasi, Ghana’s second-largest city, a 200mmscfd gas conditioning plant at Prestea, Ghana and a natural gas liquid storage terminal at the Takoradi Port. In connection with the project, GEGL and GNPC entered into a gas sales agreement to provide 329MMBtu of gas to GEGL over a 16-year period. This agreement was initially signed in 2020 and later amended in 2021 following a directive from the Ministry of Energy. Civil society organisations, including the Africa Centre for Energy Policy (“ACEP”) and the IMANI Center for Policy & Education (“Imani”), raised concerns over the allegedly discounted pricing of gas in this agreement. In response to these concerns, the Parliamentary Select Committee on Mines and Energy announced its intent to investigate these claims in September 2022. After nearly a year, the Committee concluded its investigation in August 2023. The Committee evaluated testimonies from various stakeholders including GNPC, GEGL, PURC, VRA, Ministry of Energy, ACEP and Imani and concluded that the GEGL agreement should continue to be approved. According to the Committee’s report, ACEP and Imani’s calculation methods were flawed because they calculated a hypothetical loss using the contractual sum of USD2.79/MMBtu without considering offsets from a capacity charge of USD3.29/MMBtu that GNPC pays back to GEGL.

The Committee’s report stated that the agreement would save GNPC USD1.462 billion, and if Ghana had borrowed instead, it would have cost USD1.625 billion. Additionally, the report highlighted several benefits for Ghana, including reduced transmission losses of around USD480 million, particularly when the Ameri plant is relocated to Kumasi and becomes operational. Other advantages mentioned in the report include decreased carbon dioxide emissions, increased port revenue, job creation, extended mine life and the potential for GEGL to expand its operations in Ghana, leading to more employment opportunities for citizens. Despite the Committee’s report, however, the GEGL arrangement continues to prove controversial.

For more insights on the Ghanaian Energy Sector, check out our chapter in the GLI Energy 2024 Guide here