Executive summary
Ghana’s economic growth momentum is likely to be sustained, with energy expected to drive such growth. The proper utilisation of natural gas for energy generation to augment the power sector is critical for the country. In a workshop organised through a joint effort by IMANI Centre for Policy and Education (IMANI, Ghana) and Fondazione Eni Enrico Mattei (FEEM, Italy) key stakeholders in Ghana were brought together to discuss natural gas price formation and the implications for industrial development and inclusive growth. This was based on the findings of a research report produced by IMANI and FEEM. Key amongst the findings was that, while the average delivered cost of gas in Ghana is $ 6.55/mmbtu, the average sales price is $8.55/mmbtu to power producers, resulting in significant downstream rents in excess of $2/mmbtu. Participants shared their perspectives in relation to the absence of clarity in the gas sector’s regulation and pricing, the high price of ENI gas that comes into the mix of cheaper gas from TEN & Jubilee, government’s deliberate intervention to nominate a single shipper to move gas across the sector and the need for an intelligent incentive drive to incite commensurate private sector investment in the gas sector. The declining demand for electricity, the need for a critical review of the current situation of demand-supply dynamics as well as the issue of institutional pluralism in the gas sector were also discussed. Policy action points shared by participants generally centered on regulatory alignment in the gas sector, rationalisation of non-payment of the power sector utilities for gas supplied and reduction in gas prices for industrial drive and socio-economic growth and development of Ghana.
Introduction
Ghana is seen as amongst the few sub-Saharan countries projected to experience a real annual GDP growth of over 7% in the medium term. This expected growth can be achieved provided there is stable power supply to act as catalyst. The power sector which predominantly depends on hydro-energy is however, challenged. Notwithstanding, the delimitation of the maritime boundary has allowed the discovery of natural gas which can be used to complement the power sector for stable supply of electricity to boost economic activities and growth. Natural gas has thus, become a significant contributor to Ghana’s socio-economic development. In this respect, the pricing of natural gas, how it permeates into the energy mix and its translations into tariffs for industries, commercial and residential users are important issues in relation to development for Ghana.
As part of its immense contributions towards Ghana’s energy sector, IMANI Centre for Policy and Education (IMANI) in collaboration with Fondazione Eni Enrico Mattei (FEEM) organised a workshop on natural gas price formation and the implications for industrial development and inclusive growth in Ghana on the 21st of January, 2019. The workshop brought together key officials in government agencies working within the energy sector, ministries, companies and civil society organisations that have a stake in Ghana’s energy sector.
Objectives of the event
The set of objectives for the workshop are as follows:
- To facilitate a deeper understanding on natural gas utilisation and gas pricing for broad-based development synergy and inclusive growth;
- To examine and understand the gas policy environment vis-à-vis the policy loopholes; and
- To ultimately initiate relevant policy action points for substantial reforms in the gas sector to drive development.
