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Bright Simons describes GNPC/Genser deal as another “Take or Pay” contract

2 years ago
in Business, Economy, Energy, Features, highlights, Home, home-news, latest News
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Bright Simons describes GNPC/Genser deal as another “Take or Pay” contract

Vice President of IMANI Ghana and President of mPedigree, Bright Simons, has stated that there is an attempt to create a “Take or Pay” contract for the GNPC through its combined gas and pipeline infrastructure deal with Genser.

According to Mr Simons, the Parliamentary Select Committee on Mines and Energy by okaying the GNPC/Genser deal, is committing the GNPC to pay for gas-pipeline infrastructure which it either uses or not.

Speaking during the NorvanReports and Economic Governance Platform X Space discussion on the topic, “Unravelling the Facts and Truth Concerning the GNPC/Genser Deal”, Mr Simons averred the GNPC cannot be made to agree to a “Pay or Take” arrangement with Genser and hence pay capacity charges whether or not it uses the gas pipelines.

“What we found out in our preliminary investigations is that there’s not an attempt to create two contracts. One of the contract is an attempt to get GNPC to commit to “Take or Pay” arrangements for the gas pipeline infrastructure.”

“In a country where the Government is already struggling with “Take or Pay” contracts in the power sector, you cannot watch your national oil company also enter into another contract, where it will pay for gas pipelines regardless of whether it uses the pipelines or not,” he quipped.

“We refuse to accept a contract in which the country will have to pay capacity charges regardless of whether the GNPC passes gas through the pipelines or not.

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“We propose that any agreement that is reached must be one that allows GNPC to pay for the gas it actually passes through the pipelines, and that is the position of IMANI and ACEP,” he added.

IMANI and ACEP’s resistance to the GNPC agreeing to a “Pay or Take” contract in its agreement with the Genser gas and pipeline agreement, is premised on the current $2bn debt accumulated in the energy sector as a result of the same “Take or Pay” contracts signed between the Government and Independent Power Producers (IPPs) during the country’s severe power crisis from 2014 to 2016.

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.

Tags: “Pay or Take” contractACEPBright Simons describes GNPC/Genser deal as another “Pay or Take” contractGenserGNPCIMANI

Comments 1

  1. Patrick Opoku-Darkwa says:
    2 years ago

    I disagree with Bright on this one.
    Do forgive me, I dont know the details of the infrastructure itself, that is, who built, financed it, who for, etc etc.

    However, from your article , it appears to suggest
    1. genser built the pipeline through which gnpc will transport gas. Right?
    2. Bright suggesting Gnpc should only pay if they utilise the pipeline to transport the gas.

    If my assumptions are right, then i am afraid any arrangement other than ‘take or pay’ or an arrangement that guarantees a minimum uptake of gas, i.e minimum asset utilization, makes no business sense to the developer. Lets take a toll bridge for example. A developer will build knowing what level utilisation is required to make the project viable. The project sponsor (say a govt agency) has to guarantee that level usage, as a ppp project, to make the project a reality. It makes no sense to build the infrastructure without certainty of revenue stream.

    I would be interested to know if the contract with genser is 100% take or pay or based on guaranteed minimum gas volume.

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