‘A fair gas price is one that allows manufacturers to be competitive’
According to them, the industrial sector is key to the economy and needs key interventions to function optimally, as the operators stressed the need for inclusion in the re-categorisation of gas users under the new gas policy, in a bid to manage the rising cost of production.
In a chat with The Guardian, the Director-General, Manufacturers Association of Nigeria (MAN), Segun Ajayi-Kadir, explained that though price regularity may not be what is desirable for gas franchisers, the manufacturing sector needs government intervention to remain competitive.
He noted that a fair price would be the one that allows manufacturers to be competitive, adding that the operators proposed noting more than $4.
With no less than N800 million being recorded as daily losses to flared gas, operators in the gas sector had called for a liberalised market and financial structure in the power sector, as part of measures to aid domestic utilisation and encourage investments needed to fast-track deployment of infrastructure for the commodity.
To gas operators, the current Domestic Supply Obligation (DSO) procedure that allocates arbitrary pricing on gas supplied by the upstream gas producers without considering the viability of such pricing does not work, and is a disincentive to gas producers investing in the gas infrastructure required to utilise Nigeria’s vast gas reserves.
Likewise, imposing arbitrary end customer gas prices on downstream gas distribution companies without considering investment made to develop the gas distribution infrastructure and the cost of operating and maintaining the infrastructure will have a similarly damaging effect.
In his reaction, Ajayi-Kadir said: “I understand the concerns of gas operators. The price is already being regulated and there are so many things wrong with the industry that needs to be fixed and, in the process, government has to decide its priority and this is the point we have always been raising.
“The manufacturing sector deserves a fair share of support from government and if you do not do that by a kind of special regulation, you are going to end up having less attention paid to a sector that is critical to our national development. Yes, regulation may not be desirable, but necessary at this point to support the sector.
“Already, some sectors are enjoying the price regulation, but what we are asking is that the manufacturing sector deserves that recognition in that regard because of the multiplier effect of a thriving manufacturing industry which has been proven everywhere in the world.
The Chairman, MAN Gas Users Group, Dr. Micheal Adebayo, explained that the Export Parity Price is globally expected to come up every January.
“We are only appealing to the federal government to put manufacturers under the strategic industrial sector, because there is no way we can buy at an old price and remain competitive at the global market.”
“With the meetings we have had so far, the commercial industrial sector is going to be $4.85 cent compared with the $7.87 which the franchisers are currently selling while the strategic industrial sector will be $4.15 cent compared with the $7 as it was being sold before.
So, I think the effort by the government is laudable and we can only appeal for their continuous support for the manufacturing sector”, he added.
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