The Challenge

The West African Gas Pipeline Company required economic and financial analysis, as well as expert transportation tariff advice, to help progress the development of its namesake project, WAGP. This included assistance establishing a financially viable and robust approach to future gas transmission pricing. IPA was commissioned to aid them with this overall strategic business analysis and consider the competitiveness of the operation.

Our Solution

To provide the required information and analysis, IPA conducted regional gas market analysis, economic and financial analyses of the WAGP operation and developed a new company financial model. This business model assessed the historical performance of the pipeline, revenue recovery structures and ultimately proposed competitive tariff scenarios for the business. As part of this analysis IPA, with technical support from Penspen, looked at infrastructure utilisation and explored reverse flow options and multiple gas entry scenarios.

A regional gas/LNG supply and demand analysis was conducted and the infrastructure requirements were reviewed. This analysis explored the competitive threats to the WAGP operation from alternative projects and supplies, and provided solutions to improve WAGP’s capacity utilisation.

Final recommendations were presented for appropriate gas tariff structures, based on international best practices, and a thorough understanding of the business context.