The inability of the Volta River Authority (VRA) to settle over $500million debt owed to Ghana National Gas Company (GNGC) is constricting the cash flow of the latter.
The VRA, as at May 31, 2017, was indebted to Ghana Gas to the tune of $534.2million for the supply of Liquefied Natural Gas (LNG) to the power generator.
According to Director of Finance of GNGC, Emmanuel Essel, only about 3% of that debt has been settled as of now.
Mr. Essel made the revelation Friday, August 4, when management and staff of the company interacted with the editors from selected media organizations.
The VRA is complaining that its inability to settle its debt to Ghana Gas is as a result of Electricity Company’s failure to pay huge debts owed it, whilst ECG blames its failure to settle debts to VRA on its consumers.
Some firms in the energy sector are said to be becoming insolvent due to the issue of cyclical debt.
Ghana Gas on its part owes the Ghana National Petroleum Commission (GNPC) over $162.5million.
Mr. Essel however, sees hope ahead as government steps in to resolve the situation. As a way of resolving these debt issues, the government is creating a holding fund for all receivables in the power generation sector.
In outlining his vision, the new Chief Executive Officer of GNGC, Dr. Ben Asante, said the company is committed to improving and expanding its facilities needed for effective output.
“The mission and objectives of Ghana Gas make it mandatory for the company to put in place facilities for gathering, processing, transporting and marketing of natural gas resources in the country,” Dr. Asante stated.
He plans to “invest in these facilities in a safe, cost-effective and reliable manner”.