Indebtedness, others threaten West Africa gas projects
The West African Gas Pipeline Company may soon fold up as inadequate supply of gas from Nigeria and the inability of the company to settle its $179milion debts threaten its gas projects.
Nigeria owns 24.5% stake in the sub-regional gas firm through the Nigerian National Petroleum Corporation (NNPC), with Chevron West African Gas Pipeline Limited controlling 36.9% stake.
Speaking at the opening ceremony of the meeting of the Committee of Ministers of the WAGP Project in Abuja yesterday, the Managing Director of WAPCo, Mr. Walt Perez, stated that the company faced significant risks because of its unhealthy state occasioned by low gas volumes, huge indebtedness totaling about $179 million and dwindling cash flows.
He explained that although WAGP had sometimes been technically capable of transporting volumes of natural gas up to contractual levels, many actual receipts have remained below contracted levels and are now putting the commercial viability of the WAGP project in significant doubt.
Perez added that the problem with low gas volumes was exacerbated by the force majeure declared by oil firms, mostly in Nigeria, in 2013 and which remains in effect today. He declared that as long as the situation persists, WAPCo’s business planning and immediate prospect for growth in the foreseeable future would not materialize, unless conditions change.
According to him, the company has not been receiving full and consistent payment of gas deliveries from its biggest customer, the Volta River Authority (VRA) since August 2014.
Perez said this had led to a huge backlog of unpaid invoices, totaling $104 million that is due to WAPCo’s account, plus an additional $75 million to N-Gas.
“The company initially appeared to be resilient in the face of drastically reduced revenue flows because gas transmission and other operational activities continued. The reality, however, is that WAPCo has been floundering. In fact, we have been conserving cash in order to prolong our time and operations, and as a result, WAPCo is now operating under extreme austerity conditions.”
Speaking in the same vein, Minister of State for Petroleum Resources, Ibe Kachikwu, said inadequate supply of gas was one of the challenges faced by the company. According to him, dwindling volumes and numerous other factors have served to hamper the company’s growth prospect.
Despite the enormous challenges, Kachikwu insisted that Nigeria remains committed to the ideals of the founding ECOWAS leaders that established the firm.