Ghana Plots to become West Africa’s Gas Hub in threat to Nigeria

Ghana’s state-owned oil company is progressing with plans to sell liquefied natural gas throughout West Africa in a move that will test Nigeria’s dominance and her failure to better position the country’s energy credentials.

Already shipments of the fuel are beginning to flow to a specially built import terminal.

Ghana’s Tema LNG Terminal Co. is expected to start commercial operations at the plant in the second quarter of this year and can help create an energy hub for the region, Hamis Ussif, manager for gas at Ghana National Petroleum Corp. said in a Bloomberg interview in the capital, Accra. GNPC will buy the LNG from Tema and sell it onward.

Some West African nations are embracing the use of natural gas as part of an effort to bring electricity to more people who live there but Nigeria with its significant gas endowments has been unable to ensure a steady supply of gas around the sub-region.

While the use of fossil fuels is criticized for contributing to climate change, local producers have said that the continent only accounts for 3percent of the world’s greenhouse gas emissions.

GNPC is working with partners interested in building infrastructure to sell LNG to domestic users and those within the sub-region looking to boost power, Ussif said.

“The options available include a mix of pipelines, barges, and trucks where feasible to reduce the cost of transporting to our neighbors.”

There’s already been a request from Benin, a nearby nation, to increase gas supply, Ussif said.

Ghana has a 17-year contract for 225 million standard cubic feet a day of gas from the Tema terminal, which is backed by Helios Investment Partners and African Infrastructure Investment Managers with LNG supplied by Shell.

Also this week, Ghana permitted the nation’s banks to accept overseas bonds as collateral in a bid to revive credit growth and spur economic activity in the post covid pandemic era.

Investments in offshore debt securities sold by foreign governments, companies and multilateral development banks can be used as collateral for loans, the central bank said.

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The securities must be denominated in dollar, pound, euro, or yen and need to be rated AA or above, the Bank of Ghana said in a statement on its website.

Credit in West Africa’s second-biggest economy expanded at about 6.7percent in the first 10 months of 2021, the slowest pace in three years as the pandemic decimated demand.

The central bank’s move may be attractive for overseas companies seeking to expand in the $68.5 billion economy, which accelerated 6.6percent in the third quarter.

“Foreign companies into manufacturing, real estate, and construction may be encouraged,” Benjamin Dzoboku, chief operating officer at Republic Bank said by phone, adding that it may not help local firms because they won’t have such investments.

It could drive loan-growth rate by an additional 100 to 200 basis points in the coming months, he said.

Lenders must desist from accepting debt securities issued by their local or international affiliates, the regulator said.

“With the foreign bonds you’re assured of your liquidity and if you use them to secure a loan in Ghana you can nourish your business well in Ghana and still have your foreign fixed-income back,” Dzoboku said.