The Volta River Authority (VRA) has agreed a long-term deal with Gasol LNG Import Limited for the supply of gas to the state-controlled power generator for electricity generation.

The conditional gas supply agreement that the VRA has signed will require Gasol to supply 100 million standard cubic feet of gas per day, providing an alternative gas supply source for the Authority.

This new agreement follows on from the joint-venture agreement signed in April this year between Gasol’s affiliate, African Power Generation Limited (Afgen), and Ghana National Gas Company Ltd. (GNGC). Under the terms of the joint-venture agreement, Afgen and GNGC have agreed to cooperate on the marketing of regasified Liquefied Natural Gas (LNG) from Bénin and the development of an LNG solution for Ghana.

According to Gasol, the new agreement with VRA is a significant step in its operations as it provides the company with sufficient gas off-take agreements in place to progress with development of its proposed LNG Import and Regasification Facilities to be located in Cotonou harbour, Bénin.

The Chief Operating Officer of Gasol plc, Alan Buxton, explained: “Ghana is a major market for gas supply and we are absolutely delighted to have executed an agreement with the Volta River Authority for the supply of 100mmscfd. When the Benin project is operational, the supply of natural gas to the Volta River Authority's power plants will displace the use of more expensive and environmentally unfriendly imported light crude oil”.

It is expected that when the gas from Gasol comes on-stream, VRA will have adequate supply sources to augment the West Africa Gas Pipeline Company and the Ghana Gas Company for the supply of cheap gas to power its thermal plants and reduce the Authority’s financial burden.

The Energy Minister, Emmanuel Armah Kofi Buah, has said that the VRA spends about US$3million every day to procure crude oil to power its plants.

The VRA is currently experiencing difficulties in generating power for the country as gas supply from the West Africa Gas Pipeline Company has been erratic and unreliable, while development of Ghana Gas Company’s gas processing plant at Atuabo is yet to be completed.

The situation has plunged the country into a severe energy crisis and forced the Electricity Company of Ghana to undertake a load-shedding exercise -- a demand-management recourse used whenever electricity generation falls below demand. It involves shutting out different parts of the country from electricity at certain times of the day.

The country’s power sector has moved from one crisis to the next since the seven-month black-out caused by the rupture of the West African gas pipeline in September 2012. That incident rendered the 200-megawatt solely-gas-reliant Sonun Asogli power plant dormant for almost a year.

This compelled the VRA to resort importation of expensive crude oil to power its thermal plants which, unlike Asogli, use either gas or crude oil.

The country's installed electricity capacity includes 1,180 megawatts from the Akosombo and Kpong Dams; 400 megawatts from the Bui Dam; 1,264 megawatts from thermal generating plants; and 2.5 megawatts from solar.

The VRA is currently overdrafting -- that is, overusing -- the waters of the Akosombo Lake for power generation due to the shortfall from thermal plants.

Over the long-term (2014-2021), the Authority projects electricity demand to grow at an average of 7 percent annually -- rising from 1,950 megawatts to 3,300 megawatts in 2021.

At present, the absence of adequate reserve power means the power situation is vulnerable to short-term shocks. According to the VRA, it is targetting the end of 2016 for completion of new power developments to create enough reserves to make up for any potential shortfall.