Ghana reportedly the largest debtor
Chineme Okafor in Abuja
The operations of West Africa’s multibillion dollar regional natural gas transmission company, the West African Gas Pipeline Company (WAPCo) are currently being threatened by huge backlogs of monies owed it by its customers for gas supplied to them, as well as a dip in gas volumes allocated to the company, its officials have said.
According to them, unless member countries take urgent steps to salvage the operations of the company, their investments in the venture could go down the drain in a matter of time.
The company raised the alarm yesterday in Abuja when the Committee of Ministers of the West African Gas Pipeline Authority (WAGP) met.
It explained that it was in a precarious financial state and that its continued commercial survival was now in doubt.
It also stated that it was now unable to undertake critical commercial operations because of these developments.
Nigeria through the Nigerian National Petroleum Corporation (NNPC) has a 24.9 per cent stake in WAPCo, and is the second largest shareholder after Chevron West African Gas Pipeline Limited with 36.9 per cent.
WAPCo’s Managing Director, Mr. Walt Perez, said during the meeting of the ministers that the company was in serious operational mess due largely to these issues.
Perez also said the company’s cash flow was dwindling due to these developments. He called on the ministers to come up with solutions to keep the company up.
He said WAGP had for a while remained technically capable of transporting gas volumes up to contractual levels, but that many receipts have within these times remained below contracted levels and have now built up to put the commercial viability of WAGP in significant doubt.
He stated that the problem with low gas volumes was exacerbated by a force majeure that was declared in 2013 and which still remains in effect today.
He said as long as the direct and indirect effects of low volumes and force majeure persist, WAPCo’s business planning and immediate prospect for growth in the foreseeable future would not materialise, unless these conditions change.
Lamenting the huge debts owed the company and which have contributed to its troubling cash flow, Perez said since August 2014, WAPCo had not received full and consistent payments for gas delivered to its biggest customer, Ghana’s Volta River Authority (VRA).
He said this development has seen the company’s unpaid invoices shoot up to $104 million that is due to WAPCo’s account, plus an additional $75 million to N-Gas.
“It is an occasion, I believe, for us to be accountable for all those interests and assets entrusted to our care. I see this as an occasion to reflect on the demands and problems WAPCo faces.
“The company initially appears to be resilient in the face of drastically reduced revenue flows because gas transmission and other operational activities continue. The reality, however, is that WAPCo has been floundering,” said Perez.
He added: “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.
“Under current condition, WAPCo is unable to service its debt; no more undertaking critical maintenance schedules. With the much reduced capacity to pursue growth of any kind at this time.
“Having initially relied on readily available cash to perform routine task under an austerity budget, the continuous contraction of revenue levels is now eroding the company’s capacity to remain above water and threaten the very ability to survive as a business entity.”
He told the ministers: “These are extremely stressful times, with the disturbingly sombre outlook,” adding, “we urgently seek the support of this committee to reverse the declining financial condition of WAPCo.
The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, who buttressed Perez’s claims, said despite the challenges faced by the company especially with low gas volumes, Nigeria was still very committed to the firm.
Kachikwu said: “Unless we can begin to cooperate on infrastructure development all across the region like what we see in Europe; unless we can begin to cooperate even in development of roads, total integration of the effort of the founding fathers of ECOWAS, the whole essence of ECOWAS will continue to be a dream.”
He added that: “This project is key, the ideals remains the same; the dreams the same, but I assure you that during my time as Minister of State for Petroleum Resources, I will do everything considerable that I can, through the president, to deepen this relationship, infrastructure, this resolve and indeed deepen the services that this body was meant to provide.”