ACEP projects $72.5m loss from Tema LNG project
Energy Think Tank, Africa Centre for Energy Policy (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 Benjamin Boakye, Executive Director of ACEP.
Mr Boakye made the assertions delivering a presentation during a webinar themed, “Drivers of Ghana’s Debt and Implications on the Ghanaian Economy.”
The webinar sought to indicate how inefficiencies and arrears particularly in the power sector, had contributed to the country’s present unsustainable debt status and the resulting economic crisis.
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.
“Tema LNG’s year-round supply of gas will enable the Ghana National Petroleum Corporation (GNPC) to supply reliable and cost-effective gas into the Tema power and industrial enclave, while strengthening West Africa’s energy security,” said Edmund Agyeman-Duah, the project manager of the terminal.
Ogbemi Ofuya of Helios Investment Partners said: “The Tema LNG terminal project supports Ghana’s ambitions to continue on its trajectory as one of the fastest growing economies in Africa, by delivering the energy infrastructure to support accelerated industrialisation. As evidenced in similar fast growing economies in Asia and Latin America, the introduction of LNG into the energy mix serves as a catalyst for industrial and economic growth.”
“The year-round, guaranteed supply of LNG and piped gas through the Tema LNG terminal facilitates forward planning and investments in receiving infrastructure by power plants, mines and industries across the West Africa region who are currently reliant on more expensive liquid fuels. The switch to gas also delivers a significant environmental benefit and supports the transition to cleaner burning fuels in the region by reducing CO2 emissions and eliminating sulphur emissions, in line with the Paris Climate Accord objectives,” he added.
Meanwhile, ACEP has always held the view that, government’s ambition to switch from fuel oils and hydro-electric power to Liquified Natural Gas (LNG) as the back bone of power generation will be a disincentive for oil and gas exploration in the country.
