Gas producers task government on foreign exchange availability
The Nigerian Gas Association (NGA) has called on the Central Bank of Nigeria (CBN) to include gas producers and suppliers in the 60 per cent foreign exchange (forex) platform.
The NGA argued that gas producers, suppliers and transporters are the most critical element of the gas-power value chain as they are the foundation for the survival of the power and manufacturing sectors.
President of NGA, Dada Thomas, said: “Gas investments and loans are largely denominated in U.S. dollars and must be repaid in U.S. dollars. Unfortunately the same CBN in 2015 forced gas suppliers, whose contracts are denominated is U.S. dollars, to be paid in naira at the official exchange rate without making it possible for them to access US dollars at the official rates to repay their loans.
“This subject the gas sector to unacceptable currency investment/income mismatch and forex exposure.
“Today, this, along with the illiquidity of the entire gas-to-power sector is the biggest threat to future investment in the domestic gas sector.”
Thomas added that foreign and local investors have expressed their unwillingness to invest in the gas sector due to the fact that they can’t get their money back or out.
In an official statement signed by NGA Publicity Secretary, Frank Uzuegbunam, the association stated that 80 percent of grid power is from thermal power plants and the country runs the risk of being plunged into total darkness, if the gas conundrum is not resolved quickly.
“It is of no use providing relief for the GENCOs and DISCOs and ignoring the source of their main input which is the gas from the gas suppliers.
“This will ultimately lead to the collapse of the gas-to-power sector which is an intricately interwoven value chain as no gas is equals to no power and ultimately no economic diversification”, NGA said.