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Africa Centre for Energy Policy ACEP raises questions about Sankofa Gas Project deal

According to the executive director of the Africa Centre for Energy Policy, Dr. Mohammed Amin Adam,  the price at which Ghana will pay for the gas generated from the project is way higher than the world average.

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The Africa Centre for Energy Policy- ACEP is raising questions about the Sankofa Gas Project. The project approved by parliament on Dec, 12 2014, is  believed to be  pivotal in  addressing the country’s ailing energy sector.

Despite the project’s potential of addressing the country’s serious energy shortages by developing new sources of clean and affordable natural gas for domestic power generation, ACEP is challenging the terms of the deal with the project executors- ENI and Vitol

According to the executive director of the Africa Centre for Energy Policy, Dr. Mohammed Amin Adam,  the price at which Ghana will pay for the gas generated from the project is way higher than the world average.

The average price for a cubic meter of Gas is about ₵19.00 ($ 5 [USD]) per cubic meter, why  negotiate for ₵34.20 (9 dollars [USD]). The risk profile has gone down. The risk is with gas sale which is why they have negotiated 5 different sovereign guarantees’, Mohammed Amin Adam enquired.

The World Bank’s Board of Directors, last week,  approved a record investment of ₵2,660.00 ( $700 [USD]) million in guarantees for Ghana’s Sankofa Gas Project. The Board approved a unique combination of two guarantees for the Project – an IDA Payment guarantee of ₵1,900.00 ( $500) million that supports timely payments for gas purchases by Ghana National Petroleum Corporation and an IBRD enclave Loan guarantee of ₵760.00 ( $200) million that enables the project to secure financing from its private sponsors.

In addition to these guarantees, the Sankofa Gas project executors, ENI  are demanding that the Ghana National Petroleum Authority sets up an escrow  account  in which GNPC will have to deposit its share of oil revenue for 22 years.

We are required to set up an escrow account where GNPC oil revenue will sit in as guarantee. This in itself is a problem,  because by law, GNPC only has 15 years shares in the oil revenue.  This means after 15 years GNPC will have to go back to parliament to extend the number of years in order to satisfy this requirement by ENI’, Dr. Amin Adam added.

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