Identifier
Created
Classification
Origin
04ACCRA2484
2004-12-15 17:23:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Accra
Cable title:  

WEST AFRICA GAS PIPELINE NEARING THE FINISH LINE;

Tags:  EFIN ENRG ETRD GH OPIC 
pdf how-to read a cable
This record is a partial extract of the original cable. The full text of the original cable is not available.
UNCLAS SECTION 01 OF 02 ACCRA 002484 

SIPDIS

SENSITIVE

TREASURY FOR ALEX SEVERENS/LUKAS KOHLER
OPIC FOR CONAL DUFFY
STATE PASS USAID FOR AF DAA FRANK YOUNG

E.O. 12958: N/A
TAGS: EFIN ENRG ETRD GH OPIC
SUBJECT: WEST AFRICA GAS PIPELINE NEARING THE FINISH LINE;
DECEMBER 16 FINAL INVESTMENT DECISION IS DEPENDENT ON GHANA
PARLIAMENT ACTION

REF: ACCRA 1447

Summary
-------
UNCLAS SECTION 01 OF 02 ACCRA 002484

SIPDIS

SENSITIVE

TREASURY FOR ALEX SEVERENS/LUKAS KOHLER
OPIC FOR CONAL DUFFY
STATE PASS USAID FOR AF DAA FRANK YOUNG

E.O. 12958: N/A
TAGS: EFIN ENRG ETRD GH OPIC
SUBJECT: WEST AFRICA GAS PIPELINE NEARING THE FINISH LINE;
DECEMBER 16 FINAL INVESTMENT DECISION IS DEPENDENT ON GHANA
PARLIAMENT ACTION

REF: ACCRA 1447

Summary
--------------

1. (SBU) On December 3, the Government of Ghana (GoG) hosted
symbolic signing and groundbreaking ceremonies of the West
Africa Gas Pipeline (WAGP). The States had not accomplished
all conditions necessary for the West Africa Pipeline Company
(WAPCo) to take Final Investment Decision (FID) prior to the
ceremonies. Nigeria and Benin's Parliaments approved WAGP
legislation December 7 and WAPCo signed most commercial and
World Bank documents December 9-14. However, WAPCo cannot
take FID until Ghana's Parliament approves the International
Project Agreement, Consent and Support Agreement (sovereign
guarantee),and World Bank Indemnity Agreement. WAPCo's
Board meets December 16 in Abuja to decide on FID. Costs
increase after December 21 and all construction contracts
expire December 31. Failure to achieve FID December 16 or
soon thereafter could jeopardize the project. At WAPCo's
request, Post has raised issue with the GoG and Parliament.
End Summary

WAGP Signing and Groundbreaking Ceremonies
--------------

2. (U) The GoG hosted the December 3 signing and
groundbreaking ceremonies at the CMS Energy and Volta River
Authority thermal energy plant complex near Takoradi. GoG
Energy Minister Paa Kwesi Nduom chaired the signing ceremony,
accompanied by Nigeria's Presidential Advisor on Petroleum,
Alhaji Jafaru, and the Benin and TOGO Energy Ministers.
Ghana's President Kufuor presided over the subsequent
groundbreaking ceremony.


3. (U) The West Africa Gas Pipeline Authority (WAGPA)
organized the event and intended to invite all four
Presidents. However, the December 3 date was confirmed late
due to disagreements over whether it would conflict with
Ghana's December 7 elections. The written invitations were
sent too late for Presidents Obasanjo, Eyadema, and Kerekou
to attend.


4. (U) Ambassador Yates and USAID Africa Bureau Deputy
Assistant Administrator Frank Young represented the USG and
spoke at both ceremonies. (Note: Young highlighted USAID's
five years of technical assistance on the project, and

President Kufuor and Energy Minister Nduom also emphasized
the critical role USAID assistance played in preparing the
States and helping them to fulfill their project
responsibilities on schedule. End Note) World Bank Country
Director for Ghana, Mats Karlsson, and ECOWAS' Deputy
Executive Secretary also participated.

Final Investment Decision Still Uncertain
--------------

5. (SBU) The ceremonies were purely symbolic, as WAPCo did
not recommend taking FID during its December 2 Board meeting.
WAPCo Managing Director Dennis Fahy told EconChief December
8 that Nigeria, Benin, and Ghana had not passed the
legislation and agreements necessary for FID. Nduom and the
other Energy Ministers signed only the WAGP Act regulations,
a minor document out of almost 140 total documents awaiting
signature. (Note: While the December 3 ceremonies were not
as consequential as they would have been post-FID, they
demonstrated how far the four States have come and how much
they accomplished in five years, and highlighted how much the
four governments believe this project will benefit their
countries and the region. End Note)

New WAPCo Timetable for FID
--------------

6. (SBU) The WAPCo Board meets December 16 in Abuja, followed
by a Sponsors meeting (Note: the same officials represent
the various parties at both meetings. End Note). Fahy wants
to complete all conditions prior to the Board meeting, so
that the Board can recommend FID and the Sponsors approve
FID. They need to take FID by December 16 so that all
investors will deposit funds into the escrow account by
December 20. Fahy's priority is to sign the USD 100 million
line pipe contract by December 21, because the price
increases USD 9 million on December 22. All contract bids
related to the project construction are valid through the end
of the year. Fahy estimates costs would increase
substantially were WAPCo to rebid the contracts in 2005.


7. (SBU) WAPCo, N-Gas (Chevron Texaco, Shell, NNPC),VRA, and
the Benin Electricity Company (CEB) met in London December 10
to sign the commercial agreements. The World Bank's lead
financial officer on the WAGP project, Scott Sinclair,
informed EconChief December 10 that MIGA and IDA would also
sign all necessary documentation before the December 16
deadline. MIGA plans to supply a comfort letter that will
allow WAPCo to go forward with FID, with official signings
following later in December. IDA will likely fax signed
documents to WAPCo.


8. (SBU) The Nigerian and Benin Parliaments approved WAGP
enabling legislation on December 7, completing the last of
their necessary legislative actions. TOGO had already
completed all necessary legislation. Ghana's Parliament
passed all WAGP-related legislation in July and October.
However, Ghanaian law requires Parliamentary approval of
commercial agreements the GoG enters into (Note: this is not
a requirement in Nigeria, Benin or TOGO. End Note).
Accordingly, WAPCo and the GoG (with Post support) are
pushing Parliament to approve three agreements prior to
December 16:

-- The International Project Agreement (IPA). The IPA was
originally attached to the WAGP Treaty, which Parliament
approved in July. However, Parliamentary leaders separated
them and have not yet put the IPA forward for a vote.

-- The Ghana Consent and Support Agreement, the GoG's
guarantee of VRA payments. WAPCo and GoG lawyers completed
the agreement December 13 and submitted it to Parliament
December 14.

-- The World Bank-Ghana "Indemnity Agreement." World Bank
and GoG lawyers also completed this agreement December 13 and
submitted it to Parliament December 14.


9. (SBU) Parliament reconvened December 14, so has only two
days to approve the agreements. Parliament's Chief Clerk
told Emboffs that the soonest the appropriate committees will
deliver the agreements to Parliament for a vote is Thursday,
December 16. WAPCo officials are aware that the earliest
passage date is the same day as the WAPCo Board meeting in
Abuja, and will monitor developments during the course of
their meeting.


10. (SBU) WAPCo's Dennis Fahy anticipated this time crunch
and requested Embassy support with the GoG and Parliament.
In response, EconOffs met with Finance and Energy officials
and also with Parliament's leadership. Minister of
Parliament Owusu Agyepong, Parliament's majority leader,
agreed that Parliament should approve the agreements by
December 16, but did not appear overly optimistic.
Nevertheless, Energy Minister Nduom and Finance Minister
Osafo Maafo are pushing for expedited passage of the
agreements, so passage this week is likely.


11. (SBU) The final step is for Ghana's Attorney General to
provide both WAPCo and the World Bank with a "legal opinion"
on the project, assuring all parties that the WAGP agreements
are not in breach of any Ghanaian constitutional provisions.

Comment
--------------

12. (SBU) In requesting USG assistance, Fahy commented that
even one day's delay could upset the entire schedule, and
there was little flexibility. Therefore, Ghanaian
Parliament's approval of the three agreements must happen
this week. Post believes the Finance Ministry and
Parliamentary leaders will somehow make this happen, but FID
will clearly come down to the wire.
LANIER