Industries suffer, workers’ lay-off Imminent as gas supply crisis hits hard
We’ve Received No Complain, Says NGMC
Industries in the Lagos and Ogun State pipeline corridor are currently facing production setbacks, as the pressure of gas supply has dropped remarkably, making it inadequate for most of them to undertake commercial operations.
The Guardian gathered that the industries are already considering austerity measures to be able to cope with the rigour of alternative sources of energy. While some are planning to lay off some their members of staff, others are planning to slash salaries in order to reduce the cost and ensure continuity in business.
Some of the industries that complained to The Guardian alleged that the gas supply might have been diverted to a giant facility recently flagged off in Lagos.
There have been a plethora of complaint letters from gas users to the off-takers on the paucity of supply. One of those letters sighted by The Guardian reads: “We were very satisfied for so many years and were using CNG gas for our requirement. However, for the last three months, our operations are regularly impacted adversely because of disruption in natural gas supplies to our factory premises. We would request you to kindly look into the matter and provide us continuous supplies of natural gas to our premises for continued and uninterrupted operations at our end.”
However, The Guardian gathered that the gas-marketing firms are also groaning under poor supply. The list includes Axxela Limited, NIPCO Plc, Shell Gas, Greenville Oil and Gas Company Limited, Power gas Limited and Green Fuels Limited, among others.
A top source in one of the marketing firms, who pleaded anonymity, said: “For the past six months, there has been very low gas in our pipeline and the pressure is not enough to undertake any commercial activity. The industries are suffering, we need the authorities to look into this matter and ensure improvement in gas supply to aid our industries.
“Gas is the new global agenda and Nigeria should not lag behind. The current situation we are experiencing is jeopardising the “Decade of Gas” agenda of the federal government. If we are to achieve that mission, we should start feeling the effect from now, not retrogressing,” the source stated.
There are over 3824 industries in Ogun state, according to the state government, which have invested in excess of $200 million. Lagos State is the nation’s economic nerve with a presence of over 2,000 manufacturing companies. Several of these firms, which rely on gas for their operations are currently in limbo as gas supply pressure is reduced drastically.
Another source said his company has laid over 70 kilometres of the pipeline but the current situation is a threat to that investment.
“It is making the industries bleed. They are very apprehensive because they cannot afford to switch to diesel, which is sold for N733 per litre,” he stated.
The Guardian gathered that gas supply through the pipelines cost the industries about N118 per standard cubic meter (SCM), while gas through the cascade filling system costs about N180 per SCM. This makes it unpalatable for the industries to willingly switch to cascade gas or diesel as a source of energy, due to the cost implications.
The Nigerian Gas and Marketing Company (NGMC), the gas-marketing subsidiary of NNPC, is charged with the duty of marketing and distributing of natural gas to major industrial users and utility companies in Nigeria and the West Africa sub-region.
When contacted, one of the officials of NGMC, who spoke to The Guardian through a customer care line said, “We have been supplying gas. We don’t have any issues at all and we have not received any complain.”
Chief Executive Officer, Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf said such development was not good for the manufacturing industries because alternative such as diesel is very costly and will further affect production costs.
“It is not good at this point in time. The industries already have a number of factors to grapple with, such as inflation, exchange rate, and interest rate, among others. For the gas supply to be interrupted at this moment is a double tragedy for them. It will not allow them to produce optimally and it would not allow them to create more employment nor even allow them to keep the existing labour,” he said.
He urged the gas-marketing firm (NGMC) to fix whatever problem they have with their system so that the manufacturing firms can resume optimal production.
Meanwhile, the Manufacturers Association of Nigeria, (MAN), had earlier noted that energy supply remained a major challenge facing manufacturers as 40 per cent of their expenditure goes into the sourcing of energy for production activities.
Recent data from MAN showed that expenditure on alternative energy sources by members amounted to N117.38 billion in 2017; N93.11 billion in 2018; N61.38 billion in 2019; N81.91 billion in 2020, and N71.22 billion in 2021.