Government settles $ 230 million VRA debt with Ghana Gas

Company News of Wednesday, February 20, 2019

Source: goldstreetbusiness.com

2019-02-20

In an effort to reduce the debt owed by the Volta River Authority (VRA) to the Ghana National Gas Company, the government has settled 230 million US dollars of debt through a restructuring of the balance sheet.

This was revealed at a press meeting with Ghana Gas management on Monday in Accra, by Ghana Gas Finance Manager Emmanuel Essel.

At the end of 2018, VAR owed Ghana Gas a debt of USD 735 million, even after the restructuring of the balance sheet.

Essel noted that the amount would have been higher without the timely intervention of the Ministry of Finance.

At present, the VRA consumes 90% of the lean gas produced from Ghana to produce electricity. Indeed, VRA's inability to pay for the supplied gas to power its thermal power plants affects Ghana Gas's financial situation and, as a result, its ability to produce lean gas used for power generation.

"Last year we had an agreement with them (VRA) that they were paying US $ 3 million every month starting in April. However, it stopped in October, "said Essel. "The whole of last year, we received about 20 million US dollars from the VRA, against 30 million dollars on average each month.

This has resulted in a deficit of about 340 million US dollars in 2018 alone.

Discussions are ongoing at the board level and discussions are continuing with the government on ways to further restructure a portion of the debt to ensure the VRA can pay in the future.

At present, the US $ 30 million of gas from Ghana Gas has been reduced due to piped ENI gas. Currently, it oscillates between 10 and 16 million US dollars per month.

Mechanism of falling water

In July 2017, the Cabinet approved the implementation of the Cash Flow Management Mechanism (GCM) as a new income distribution system to cope with rising legacy debt from the energy sector.

Mr. Ben Asante, Director General of Ghana Gas, expressed optimism about the government's adoption of this new mechanism aimed at solving the problem of debt in the energy sector.

This mechanism is part of a broader strategy to ensure an equitable distribution of energy sector revenues to all stakeholders in the value chain, as the ministry plans to end the practice. which favors the financing of certain energy producers.

The inherited debts as such represent, in terms of total portfolio, all the energy sector agencies, such as the Tema (TOR) oil refinery, the Volta River Authority (VRA) and the Electricity Company. Ghana (ECG), among others.

At present, a total of 4.78 billion GHc out of more than 6 billion inherited VRA debt, or 80 percent of the total, has been paid by the government. However, this payment only reflects the total debt accumulated by the VRA alone and not the total debt of the sector.