The director of public affairs at Ghana National Gas Company Ltd (GNGC), Ernest Owusu Bempah, who was briefing journalists in Accra on Tuesday 1 November 2022, said that the contract was the most expensive gas deal globally.
On a monthly basis, he said, Ghana is paying $46 million, making the cost $552 million yearly. The contract was also signed for over two decades, he said.
The Akufo-Addo government had no choice but to continue with the contract when it came into office because of the terms and conditions, Owusu Bempah explained.
“This contract was signed for 20 to 25 years, monopoly for that period, and the IMF questioned it,” he said.
“We wouldn’t be going to the IMF but for some of these reckless dubious contracts signed by the Mahama administration,” he said.
Bempah said that the contract is partly to blame for the economic challenges facing the country. The government is unable to reduce cost of electricity for thermal generation, he added.
The former president Mahama signed the agreement with ENI and Vitol Energy at Peduase Lodge, near Aburi, in 2015.
At the time, this was probably the single largest foreign direct investment in West Africa and, indeed, Ghana since independence.
The project was situated in the Western Region. Oil production from the Offshore Cape Three Points venture was estimated at 80,000 barrels per day.
Recently, the World Bank country director for Ghana, Pierre Frank Laporte, identified losses in the energy sector of the economy as one of the challenges that forced Ghana into a situation where it is now seeking support from the International Monetary Fund.
“The big issue has been on the fiscal side. Before the current crisis happened, we observed certain challenges on the budget side that really has been the area more hit by everything. Also, where actions are required now to deal with them.
“For instance, on the revenue side we have always been saying that this is an area where Ghana should do better. We are encouraged by the fact that this should be one of the areas for potential programme and support from the World Bank. The problem is fiscal, not just revenue.
“The problem is that there are also spillovers from other sectors. For instance, the energy sector. There is about one billion dollars going to the energy sector because of losses. The sector itself is not financially viable and to keep it going you have to subsidise.
“Actions are required. Of course, with COVID, the general business environment is being a bit more difficult,” he said.