Nigeria defers plan to slash gas supply to Ghana

Nigeria's N-Gaz was to cut supply by 70 pct
Ghana due to increase domestic gas production
World Bank praises Ghana economic reform plan
Nigeria has deferred a plan to slash gas exports to Ghana
beginning Friday over an outstanding debt of $181 million,
alleviating a threat that could have worsened electricity
blackouts and caused another headache for the government.
The West African Gas Pipeline Company (WAGPCo) said it was
"cautiously optimistic" that Nigeria's N-Gaz consortium would
accept a payment plan by Ghana's power generation company,
the Volta River Authority (VRA), after talks in Accra next week.
Ghana gets around 25 percent of its power through gas from
Nigeria that flows through the pipeline via Benin and Togo and
the threat by N-Gaz to reduce volumes by 70 percent would
have raised the cost of supply.
The issue is sensitive for President John Mahama's government
ahead of elections next year that are expected to be closely
fought. The ruling party already faces an economy that has
slowed sharply and power cuts that have angered voters.
Mahama has vowed to end the blackouts by the start of next
year and his minister for power, Kwabena Donkor, has said he
will resign if the problem has not been fixed by then.
"By next week we are expecting a way forward ... There appears
to be a will by all the parties to resolve the issue without the flow
of gas being cut off," Harriet Wereko-Brobby, spokeswoman for
the pipeline company, told Reuters.
Donkor led a government delegation to Abuja for emergency
talks on Thursday and Friday, and Wereko-Brobby said her
company had been told the government paid N-Gaz $10 million.
VRA owes the company $103 million of the outstanding total.
The power generation company's problems are a sign of the
budgetary stress facing Ghana, a country that is following an
International Monetary Fund programme to restore fiscal
balance.
Ghana's exports of gold, cocoa and oil helped make it one of
Africa's star economies but a decline in commodity prices has
hit it hard. VRA stopped paying its bills in August 2014. Prior to
that it had been borrowing money from Ghanaian banks at high
interest rates to fund the payments, an energy expert said.
The power crisis stems from a fall in supply from Ghana's
dams, government underpayment to the Electricity Company of
Ghana, residents' illegal consumption and tariffs too low for VRA
to recoup its costs, experts said.
In the long term, Ghana aims to solve the problem by greatly
increasing its domestic gas production. The president of the
World Bank said on Friday the government was on the right
track.
"We are very supportive of President Mahama's current reform
strategy. We think he's now making the hard decisions ... to get
Ghana back on the path of growth," World Bank Group president
Jim Yong Kim told Reuters.