‘Break Ghana Gas Company’s monopoly’

The natural monopoly of the Ghana National Gas Company (GNGC) should be broken to allow for competition in the distribution and marketing of the country’s own natural gas, the Africa Centre for Energy Policy (ACEP) has said.

“GNGC should not be responsible for buying and selling gas. Gas purchases should be opened to marketers, and producers should be free to enter into gas sales arrangements with marketers and bulk consumers. Thus, some bulk consumers can be connected directly to the transportation network.”

The suggestion is contained in a gas policy option paper ACEP has presented to the Energy Ministry to aid the development of a national gas policy.

As it stands now, the GNGC has been mandated to build and own pipelines; buy, transport and sell gas. The national gas company therefore has exclusive right across the supply chain. ACEP however argues that upstream developers will be much more confident if they can develop their gas, bring it to Ghana Gas Company to process and then transport or have it transported to their own identified buyers.

At the inception of its gas industry, Mexico is said to have adopted the monopolistic approach, whereby state-owned PEMEX was the only agency authorised to build, operate and own pipelines. It also exclusively imported, exported, and commercialised natural gas in that country.

“However, evidence shows that this vertically integrated structure resulted in limited domestic exploitation of natural gas for the domestic market [in Mexico], as major investments in exploration and exploitation of gas reduced as a result of low investments.

This also limited investments to expand the distribution network to serve industrial and residential consumers. The poor distribution system led to increased gas-flaring from associated gas.

“The difference in Ghana is that there is enough market for Jubilee gas for power production, but with increasing potential from Sankofa and other recently discovered fields, the need for an investment-friendly market structure cannot be overemphasised,” ACEP said.

The GNGC is currently constructing a gathering pipeline from the Jubilee Field to the gas processing plant at Atuabo. The company is also constructing a transmission line from the processing plant to Takoradi to transport processed gas to the thermal power plants at Aboadze.

ACEP recommends, however, that there should be unbundling of transmission from distribution and marketing.