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Manufacturers to save $3.77/kcf under revised gas policy

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Gas plant

•Operators hail review, optimistic of improved productivity
Local producers deploying gas for production, especially those in the textile industry, will save at least $3.77/kcf under the new gas pricing arrangement unveiled in the official gazette by the Federal Government.

Indeed, the manufacturers, who had hitherto paid $7.62/kcf as well as groaned under the cost and franchise agreement, will now pay at least $3.85/kcf under the new template, while variation in price for 2019 is expected to be determined later in the month.

The Manufacturers Association of Nigeria (MAN) Gas Users Group had advocated a downward review in gas pricing to below $3 under the revised gas policy as well as provide preference for domestic consumers in a bid to revive moribund factories and increase capacity utilisation.

In a chat with The Guardian, the Chairman of MAN Gas Users Group, Dr Michael Adebayo, 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 had stopped production due to the exorbitant and dollarization pricing of gas.

He therefore commended the government’s revision of the gas policy noting that the move will break monopoly in the sector, as well as aid productivity in the real sector.

He explained that once the export cost has been determined for January, operators are hopeful of saving more in terms of pricing and gas cost.

Expenditure on alternative energy source in the manufacturing sector stood at N43. 19 billion in the first half of 2018 according to MAN statistics for the period, which is 34.6 percent and 15.9 percent lower than N66.03 billion recorded in the same half of 2017 and N51.35 billion of the preceding half respectively.

The decline in expenditure on alternative energy source was ascribed to low utilization of energy in the period due to general sluggishness of economic activities and slight improvement in electricity supply from the national grid.

“We commend the government for being able to address the gas pricing issue. This will improve productivity in the textile and other allied industries. Within this year, we plan to increase our shifts and employ more people. A lot of companies have shut down operations due to the high cost of running their plants, coupled with the effects of smuggling on the business.

“Though the market has been very dull as consumer purchasing power remains low, we will also be involved in some diversification by bringing in more raw materials for production. Though access to foreign exchange seems to be challenging in some sectors, we are optimistic that it will improve in due course”, he added.

MAN had in a letter to the Minister of State, Industry, Trade and Investment, Hajia Aisha Abubakar and signed by the association’s Director-General, Segun Ajayi-Kadir stated that the existing categorisation of manufacturing sector as ‘Other Commercial sector’, has left bigger room for abuse by the franchisers which is one of the issues that MAN believes the new National Gas Policy should address.

Citing the challenges encountered by the local producers under the new gas pricing regime, Ajayi-Kadir said: “There have been supply gaps and its accompanied constraints on local users as a result of the preference for export at the detriment of domestic demand.

“The recent incessant increases along with subtle harassments of our members by the franchisers constitute an unhealthy business environment and is destabilising our members’ business operations”.


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