Addressing Gas Shortage in Ghana

Addressing Gas Shortage in Ghana

22 July 2011

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Ghana — Following the devastating bush fires of 1983 due to the rapid spread of the effects of desertification the government took a number of steps to stem the tide. Apart from the re-afforestation programme by way of massive tree planting, the government also undertook to sensitize the people to the use of LPG for cooking. Hitherto the commodity was flared by TOR as a waste product. The state owned oil company, GOIL, took up the challenge of making the commodity available and easily accessible through a door to door gas distribution in free cylinders. Goil also went as far as arranging the sale of gas stoves at affordable prices to households. All these were aimed at coercing people to use liquefied gas and shift away from the use of firewood and charcoal and subsequently help conserve the forest. Luckily, the idea was whole heartedly bought by Ghanaian households, chop bar operators and other food vendors as it was easy to adopt, more convenient to use and provided neater environment than firewood or charcoal.

However as the commodity gained currency, the price of LPG started to increase as petroleum prices continued to go up globally. Consumers had to purchase their own cylinders while the price continued to go up as well. This drew out cries from the public who threatened to go back to the use of charcoal and fire wood if nothing was done about the rising prices. Government had to step in again to subsidise LPG. All these were done in the name of conserving the forest. Little did any one expect that the commodity, would become scarce not because the resource has been exhausted. Nigeria, the country’s main source of supply has still millions of tonnes of gas to explore. At least the initiators of the West African Gas Pipeline Project attest to this. But what has been the response of the bodies charged with ensuring the supply of the product? While Tema Oil Refinery, TOR, talks of lack of facilities to produce the commodity in order to meet the rising demand, the National Petroleum Authority (NPA) which is expected to regulate the operations of TOR simply attributes the frequent shortage to the increasing use of LPG by commercial vehicles and even dares to suggest the removal of subsidy for domestic users to make its product less attractive to commercial vehicles. Why not introduce price differentials so that commercial vehicles can purchase at market the price.

The NPA Acting Chief Executive further blames OMCs or Oil Marketing Companies for not following laid down rules and regulations in the proper distribution of Liquefied Petroleum Gas. He further thinks the present demand is artificial. He claims that since the refinery produces about 900 tonnes daily, the daily current demand can only be nothing but artificial. Meanwhile available information indicates that TOR has tanks that can take 6,500 metric tonnes while the refinery can produce only 900 tonnes a day hence the jetty, the pipe lines that carry the gas need to be expanded. Strategically, it is prudent that the country builds another gas production plant outside Accra-Tema to serve the increasing demand. In the normal business sense, public organisations like TOR which want to believe is in business, ought to welcome the increase in demand, be it artificial or otherwise for a commodity which was initially a waste product, by taking up the challenge and producing more.

It is true that currently, crude oil is imported but very soon Ghana will not have to import all its needed crude oil. But the question is how prepared is TOR for Ghana’s own gas? Ghanaians were informed that the expected gas from the West African Gas Pipeline Project has arrived in Tema. What is holding back the use of the commodity, we understand it is lack of infrastructure to carry the gas to users. However due to the huge cost involved, there is need to get people who are prepared to invest in this sector. The government has a share worth about 18 million dollars in the West African Gas Pipeline Project and must not allow this investment to go waste. Major factories like Unilever, Valco, Aluworks and other companies that would serve as originating customers should be willing to help. Government should also seek foreign direct investment in the gas sector, especially that Ghana would soon be having her own gas.

The country’s oil and gas is said to be measureable as more of the natural resources are discovered in several areas. It is also hoped that the government will strictly enforce the law against flaring gas. The sector, if well developed will not only serve as an alternative source of energy and boost industrialisation but will also provide the needed fertiliser resource for agricultural development.

It is hoped that the Energy Summit due to take place in the middle of November this year would really be able to attract investors into the area of infrastructure and technology that would help develop the nation. Nigeria which produces so much oil does not under rate the role of gas in the provision of its energy. President Goodluck Jonathan did not hide his recognition of the former waste product turned an important resource, when recently he announced foreign investments amounting to 25 billion of dollars from Italy’s – Eni, Saudi Arabia’s Xenel Industries and US based Chevron in the gas sector as part of its much touted plan to harness more of its abundant gas resource. Contributors at the recent Ghana Policy Fair acknowledged that Ghana’s gas reserves are a tremendous potential than oil and could be the single panacea to resolving the country’s serious development challenges especially in the area of energy.

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