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By Matthew Mpoke Bigg
ACCRA, Oct 20 (Reuters) - Ghana's government said it willpay Nigeria's N-Gaz the $170 million it owes by February,averting the gas consortium's threat to cut off supplies, whichwould have made Ghana's power crisis worse.
Ghana's state power generating company, the Volta RiverAuthority (VRA), will settle the debt in three tranches startingin November, Kweku Sersah, a spokesman for Ghana's Ministry ofPower, said. Power supplies are no longer at risk, he said.
"The high-powered delegation that went ... (to the Nigeriancapital Abuja) was able to negotiate for Nigeria Gas (N-Gaz) tocontinue to supply the country the needed gas," Sersah said in astatement posted on the ministry's Facebook page.
Ghana gets about 25 percent of its power from Nigerian gas,and N-Gaz's threat to cut supply by 70 percent would have madeit harder to achieve the government's goal of ending poweroutages this year and could have raised supplycosts.
Ghana will clear a backlog of arrears that stretches back to2012 and has also committed to pay in full for gas it receivesbetween now and next February, the Nigerian National PetroleumCorporation (NNPC) said.
"The highlight of the agreement is that the total sum of gassupply debt will be cleared by February 2016 at the latest," theNNPC said in a statement.
However, it is unclear how VRA will generate the extrarevenue to pay off the debt given the shortfall in payments fromthe state Electricity Company of Ghana, which does not generateenough revenue to cover the costs of its payments to VRA.
Experts say that is because energy tariffs are too low,residents find ways to skip payments illegally or pay too littleand the government itself is behind in its payments to theelectricity company.
VRA's payments to N-Gaz dwindled in August 2014, accordingto the West African Gas Pipeline Company (WAGPCo), and beforethat it borrowed money from Ghanaian banks to pay for purchases,creating debt it struggles to finance, one energy expert said.
In the long term, Ghana aims to solve the problem by greatlyincreasing its domestic gas production but for now governmentfinances are under extra scrutiny due to an InternationalMonetary Fund programme to restore fiscal stability.
The issue is sensitive in the run-up to Ghana's electionnext year that is expected to be closely fought. Power cuts haveangered voters and come on top of a sharp slowdown in theeconomy, which for years was one of Africa's strongest.
N-Gaz is a joint venture company owned by the NigerianNational Petroleum Corporation, Shell and Chevron that delivers gas through WAGPCo to Ghana. (Additional reporting by Ulf Laessing in Lagos; Editing byLouise Ireland)