MAN, Senate panel seek end to gas pricing crisis

Committee mulls special incentives to encourage local producers

With concerns about the pricing of gas for local manufacturers yet to be resolved, the Senate Committee on Gas and Manufacturers Association of Nigeria (MAN) Gas Users have sought legislative means to amend laws that make doing business difficult for operators.

Indeed, the Senate Committee on Gas urged the gas users to agitate for special incentives on the pricing in order to encourage local manufacturing in the country, adding that the Committee is putting together a Bill on incentives particularly on gas pricing with a view to encouraging local industries.

MAN Gas Users Group had urged the Federal Government to review the gas pricing policy in line with present day challenges.

According to the manufacturers, the breach of collective agreement contained in the Gas Supply and Purchase Agreement (GSPA) has led to a situation where franchisers are indulging in the habit of exploiting operators and innocent citizens.

Resolutions of a meeting between the manufacturers and Senate Committee on Gas showed that efforts are underway to initiate a process of reviewing Natural Gas Pricing Act by amending the grey areas that favour the suppliers.

A copy of the report of the meeting obtained by The Guardian showed that the stakeholders further agreed that Natural Gas Pricing Act should be structured in a way that it will allow a free market.

The Chairman of MAN Gas Users Group, Dr Michael Adebayo, in a recent chat with journalists stated that the growth of the manufacturing sector is being hampered by the huge burden of energy crisis caused by power outages and high cost of petroleum products, adding that many factories have stopped production due to the exorbitant and dollarization pricing of gas.

Adebayo said: “MAN is constrained to draw the attention of the Federal Government to the issues of persistent increase in the price of natural gas used by manufacturers to power their plants and machinery by the gas franchisers.

“This has persisted for some time now and has reached a crisis dimension as most factories have stopped production and more are about to shut their operations due to non-supply of gas to power their operations on one hand and the current exorbitant and dollarization pricing of available ones on the other.

“To encourage and stimulate industrial activities as well as stop the flaring of gas, the price of natural gas was benchmarked against the price of LPFO. This was to make gas cheaper at about 30 per cent, lower than LPFO, which was then the cheapest among the petroleum products. The initiative motivated manufacturers to invest heavily in the conversion of their production technology and process to the use of natural gas”.

He explained that the controversy on the issue of gas pricing started in 2008, after which MAN, through Federal Government’s intervention conceded to an agreement to increase the price of gas by 15 per cent to allow franchisers recoup their investments.