INSTEPR offers remedial framework for GNPC-Genser agreement
The Institute for Energy Policies Research (INSTEPR) has issued a series of recommendations regarding the GNPC-Genser agreement.
These recommendations aim to address critical concerns and legal ambiguities associated with the deal.
The key recommendations include agreement restructuring, regulatory mediation, and transitioning existing gas agreements.
1. Agreement Restructuring: INSTEPR advises the division of the existing Gas Sales Agreement into two distinct agreements, aligning with Genser’s proposal. The first agreement, designated as the standard gas sales agreement, should be executed exclusively with Ghana National Gas Company (GNGC), the appointed gas aggregator. It is emphasized that this agreement should not entail any deviations from the Weighted Average Cost of Gas (WACoG).
2. Transportation Agreement: The second agreement, termed the transportation agreement, should be inked with GNGC, which serves as the nation’s gas transmission utility. Within this agreement, INSTEPR underscores the importance of addressing capital cost recovery related to the 110 km pipeline and delineating clear terms for the operation of the infrastructure.
3. Regulatory Mediation: INSTEPR advocates for active participation by regulatory bodies, specifically the Public Utilities Regulatory Commission (PURC) and the Energy Commission. These entities should take a lead role in mediating and overseeing the technical and financial intricacies arising from the agreement. Their involvement is seen as paramount in ensuring strict adherence to prevailing legal and regulatory frameworks.
Furthermore, INSTEPR underscores the necessity of transitioning all existing gas agreements previously entered into by GNPC to Ghana National Gas Company (GNGC), which has been newly designated as the gas aggregator. This transition process would require the termination of the current Gas Sales Agreement (GSA), to be replaced by the two proposed agreements.
INSTEPR expresses confidence that these recommended measures will effectively address current concerns and inconsistencies in the GNPC-Genser agreement. It is anticipated that this rectification process will play a pivotal role in restoring trust and bolstering confidence in the mid-stream activities of Ghana’s energy sector.
In September 2022, ACEP and Imani initiated an investigation into a sole-sourced contract between Genser and GNPC, encompassing a combined gas and pipeline infrastructure agreement.
Their analysis revealed that Genser stood to receive $1.5 billion in gas discounts over a sixteen-year period, while utilizing effectively subsidised infrastructure to expand its enclave power projects across the country.
Subsidies granted Genser in the deal, the two think tanks further noted, also allowed Genser to poach bulk consumers from state entities such as VRA and ECG.
But the Parliamentary Select Committee on Mines and Energy has come out with a report on the Ghana National Petroleum Corporation (GNPC) and Genser Energy Ghana Limited (GEGL) deal, stating that, there are no evidence of losses to the State as claimed by IMANI and ACEP.
