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Dr Theophilus Acheampong
Dr Theophilus Acheampong

Ghana needs to reduce the price of gas to aid industrialisation

Government has been urged to take a critical look at the gas production sector by reviewing the pricing system which has a lot to do with the high price of electricity power in the country.

“If we want to be competitive, if we want to support industrial growth, then ultimately it means that the price of power that people pay has to come down. This means that how the gas, which is the fixed stock for power generation, is priced is important.

“Ultimately we know that if the price for gas is lower, electricity tariffs will be lower. Then you create jobs, then you have more revenues coming to government. This would boost industrialisation, create more jobs and wealth for the people”, Dr Theophilus Acheampong, an Energy Economist, said on Monday.

Dr Acheampong, who doubles as a Senior Fellow with IMANI, made the call at a workshop on “Gas utilisation, gas pricing and inclusive development” on organised by IMANI Centre for Policy and Education and the Fondazione Eni Enrico Mattei (FEEM), a research institution, in Accra.

At the workshop, a research and analysis on the Gas Price Formation in the country was discussed and the need for the gas price systems to be reviewed was highlighted.

The gas sector has been said to offer Ghana significant cost saving security of supply and meeting environmental benchmark than other fuel choices.

It however, faced with structural non-payment issues, from the inability to recoup costs of gas supplied by exploration and production companies to the Ghana National Petroleum Company through the Ghana National Gas Company for use by the Volta River Authority and other Independent Power Producers in power generation, posing systemic risk.

Dr Acheampong said in Ghana, a lot of power generation, about 60 per cent come from thermal power which uses gas as the fixed stock for fuel and this is being generated at 13 to 14 cent per kilowatt per hour while that of neighbouring Cote d’Ivoire was generated at 10 cent power kilowatt per hour.

He said the gas price in Ghana is still relatively high, because there is a lot of rent- (extra monies) that were going to government which was over and beyond the actual cost of delivering the gas.

“And we are saying that some sort of review needs to be looked at. But I recognise the fact that the Public Utility and Regulatory Commission (PURC) has started looking at that. We still think that when it comes to the processing, transportation and distribution cost there has to be an economic rationale for it, which currently, we don’t think there is.

He said the review of gas prices needed to be hastened to bring aid industrialisation which could be a backbone to the Ghana Beyond aid Agenda.

“Fundamentally you need a decent gas price that will feed into the electricity tariffs”, Dr Acheampong said.

Professor Manfred Hafner, a Senior Fellow with FEEM, reiterated the need for government to reduce its overall rent on the processing of gas which was contributing to the high pricing of gas and high tariffs.

He said there is the need for government to facilitate the process of ensuring a synergy among the regulatory institutions in the petroleum sector towards solving the regulatory challenges.

Mr Kofi Bentil, the Vice President of IMANI Ghana, said the country needs to have a better clarity on it National Gas Strategy especially, regulatory and pricing issues, adding that “we still don’t have a good enough strategy on our gas sector”.

He suggested that the country should rather export almost all of its oil and use all of it gas that it produces.

Source: GNA

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