Energy sector a low hanging fruit for political manoeuvring and corruption – ACEP
Executive Director of the African Centre for Energy Policy (ACEP), Ben Boakye, has said Ghana’s energy sector and to a large extent, the Continent’s energy sector is a low hanging fruit for political manoeuvring and corruption by politicians.
Making reference to the recent oil bribery case involving Glencore, Mr Boakye averred corruption is rife in the sector making the sector inefficient.
Inefficiencies in the energy sector, he further noted, results in huge debts for the sector.
“The energy sector appears to be a low hanging fruit for political manoeuvring and corruption, and the Glencore case is a testament to that (sic),” he remarked speaking during a webinar on Wednesday, November 9, themed High Fuel Prices, Climate Change and Corruption. What is the Link?
Glencore officials are said to have delivered cash in private jets to officials across Africa, UK prosecutors said as they laid out a web of bribery and corruption orchestrated by the London oil trading desk.
The company is said to have paid more than $26m in bribes to secure access to oil cargoes in Africa.
The company paid $26m (£23m) through agents and employees to officials of crude oil firms in Nigeria, Cameroon and Ivory Coast between 2011 and 2016.
The UK subsidiary of the mining giant Glencore has been ordered to pay more than £275m ( $307,516,000 ) in fine for bribing officials in African countries to get access to oil.
Speaking further at the webinar and touching on the Tema LNG project, Mr Boakye noted the period in which Ghana critically needed LNG has passed, hence the Tema LNG project at the moment, is to add to already existing excess capacity which will cost the country more.
“The critical period for LNG was between 2016 and 2018 before the addition of the Sankofa oil field. Ghana missed those critical periods and it was clear that after 2018, LNG was just going to be excess capacity,” he quipped.
ACEP projects $72.5m loss from Tema LNG project
Meanwhile, ACEP has projected a $72.5m loss in revenue from the Tema LNG project by government.
The revenue loss projection by ACEP is based on the approved budget for the GNPC by Parliament for this year.
According to ACEP, the Tema LNG infrastructure in its entirety is going to cost government $59.5m.
That aside, government is expected to make purchases of LNG costing some $163m.
The cumulative cost of the LNG facility and LNG purchases, ACEP further notes, amounts to a total of $222.5m
However, estimated revenue from the LNG project for the year 2022 is $149.95m.
“This indicates that GNPC is even preparing to make a loss for the imports of LNG, even assuming that there is a need for the LNG which by the way is not the case,” stated Mr Boakye.
Government, through the Tema LNG import terminal is anticipated import LNG for power generation so as to be able to meet the industry’s demand for electricity which have mostly relied on heavy fuel oils and diesel imports.
Ghana has one of Africa’s highest rates of electrification, yet industrial development has been hampered by unreliable supply. Over-reliance on hydro-power led to a prolonged crisis in power supply, which included electricity rationing, between 2012 and 2015.
According to the African Develoment Bank (ADB) which is a financier of the Tema LNG project, current natural gas demand in the country is not being reliably met by local gas production or serviced by the West African Gas Pipeline, hence the Tema project will facilitate electricity grid expansion.
With the arrival of a floating regasification unit (FRU) for the terminal, the terminal has the capacity to receive, re-gasify, store, and deliver around 1.7 million tonnes of LNG a year, about 30 per cent of Ghana’s general capacity.
