Manufacturers want government to review gas pricing policy
The Manufacturers Association of Nigeria (MAN) Gas Users Group has 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.
The manufacturers also sought the intervention of the Federal Government in giving concessions to industrialists just like what is being given to power generating companies (GENCOs).
Addressing journalists in Lagos, yesterday, 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 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.
He noted that the agreement, which was brokered as a sacrifice by MAN members, even though at a loss and further increase in the cost of doing business has created a platform which franchisers inadvertently used to breach the collective agreement.“In 2010, another round of infringement was perpetrated by all the franchisers with the demand for another round of increase in price without amendment of the GSPA. This led to the adoption of a gas pricing policy in which the price was benchmarked against the movement of foreign exchange.
“However, the price of gas in Nigeria remains higher than the international price averaged at $2.5 compared to Nigeria’s $7.65 per scm”, he added.He then urged government to ensure that effective mechanism is put in place to check activities of the operators, while local currency should be used in transacting business in the country as directed by the Central bank of Nigeria (CBN).