The Volta River Authority (VRA) yesterday signed a Letter of Intent (LOI) and Term Sheet for the Takoradi Gas Sales Agreement with N-Gas of Nigeria. N-Gas represents the Nigerian National Petroleum Corporation (NNPC), Chevron Nigeria Limited (CNL) and Shell Petroleum Development Company of Nigeria limited (SPDC).

The LOI outlines key commercial arrangements that commit all parties to cooperation in the development and integration of the economies of the West Africa sub-region.

The Minister of Energy, Mr. Albert Kan-Dapaah and the Chief Executive of the VRA, Dr. Charles Wereko-Brobby signed on behalf of the government of Ghana while the Chairman of N-Gas, Nigeria, Mr. Joe Anyigbo signed for the three companies.

Mr. Kan Dapaah said after the completion of the project it is expected to reduce the cost of thermal power generation by substituting cheaper gas for the crude oil that is being used currently at the Aboadze Thermal Plant in Takoradi.

He said, "Current analysis indicate that, at today's crude oil prices of $25 per barrel, the fuel bill for the Takoradi Thermal Plant could be reduced by between 20-25% per annum. This translates to savings of about US$20 million per year or USD400m over the twenty year period initial contract period."

He said the availability of cheaper power and gas will spur on the establishment of competitive energy-intensive industries such as steel mills, which are currently dependent on expensive electricity.

He said the Government is fully committed to the project because it would ensure reliability of supply and affordable prices.

Mr. Kan Dapaah said through the development of the West Africa Gas Pipeline Project (WAGP) Ghana's status as a stable and congenial destination for foreign direct investors would be enhanced by the availability of not only cheap and reliable electricity, but also the availability of abundant gas which is a basic criteria that investors demand when making their feasibility studies.

Mr. Joe Anyigbo said the project is a significant demonstration of West Africa's progress towards regional integration, which is to harmonise trade and economic development for the region.

He said, "Although we have more steps to make, I am confident of the commitment being demonstrated by the governments and industrial partners will ensure the project will be successful."

He said the project is an important element for the producers in their efforts to provide safer, reliable energy for the domestic, regional and international markets using the abundant gas reserves in Nigeria.

Dr. Charles Wereko-Brobby said the WAGP project is a key element of VRA's program to develop a comprehensive electric power supply program that will provide both sufficient and cost effective supplies of energy which are key for strong economic growth. He said although the VRA has a responsibility to generate and transmit power, it can continue to fulfil these mandates only when it meets its cost.

This according to him calls for economic tariffs.

The WAGP is a 600km offshore pipeline running from Lagos, Nigeria to Takoradi with pipeline laterals for additional gas supply into Togo and Benin. The project development group includes CNL, NNPC, SPDC, and VRA. Others are, Societe Beninoise de Gaz S.A and Societe Togolaise de Gaz S.A.