N-Gas Limited has officially notified the Volta River Authority (VRA) of its decision to halt gas supply to Ghana effective March 6 due to outstanding arrears worth over $75 million.

In a letter addressed to the Managing Director of VRA on Tuesday, February 18th, the company noted that despite all the commitments received from VRA, N-Gas is yet to receive any payment from VRA throwing the entire value chain into panic and uncertainty with N-Gas reputation on the line.

The company noted that it has supplied gas to VRA despite not being able to pay its Gas Suppliers and Transporters since November 2024 due to the high level of debt.

"However, VRA’s action could soon result in gas supply and transportation reliability issues," the letter noted.

According to N-Gas Limited, it has not received either of the committed payments (USD25million on or before 21 February 2025), nor have the stipulated conditions precedent been fulfilled, thereby constituting a material breach of the agreed terms.

In accordance with Clause 4 (specifically 4.2, 4.4(b), 4.4(e), and 4.4(k)), Clause 14 (specifically 14.1–14.5) and Clause 13.6(a) of the Takoradi Gas Sales Agreement (TGSA), N-Gas shall among other things: "Remove the stay order on the SBLC call and proceed with calling on the Letter of Credit by Monday, 18 February 2025 and dffective 6 March 2025, N-Gas shall cease further gas supply to VRA, in accordance with Clause 13.6(a) of the Takoradi Gas Sales Agreement, which provides for the cessation of gas supply in the event of non-fulfillment of payment obligations by Buyer."

To ensure the sanctity of contracts across the value chain, N-Gas says it may demand one month of pre-payment from VRA for continued gas supply.

This development raises concerns over Ghana’s energy security, as the potential suspension of gas supply could impact power generation. The VRA, which relies on gas from N-Gas to fuel thermal power plants, may be forced to explore alternative arrangements to prevent disruptions to electricity supply.