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Expert explains rising cost of gas, impacts on manufacturing

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Leading player in the oil and gas sector and Managing Director of Falcon Petroleum Limited, Prof. Joseph Ezigbo has disclosed that the key reason behind the galloping price of gas  is not only because it was benchmarked in dollars due to government policy and the cost of gas flaring, but mainly because “It is very expensive to bring gas out of the ground”.

“In the past, our gas was cheap because it was a by-product of oil; so, the gas was already paid for along with the payment for oil.

“But now, we are billing for gas exclusively and the cost of producing just gas alone is higher. So, comparatively, if you put gas and diesel side by side, the gas is still cheaper.”

Prof Ezigbo also added that “The government took a deliberate action to fix the price of gas so that people will not sell differently,” stressing that “there is a proliferation of willing-buyer-willing-seller situation where people are buying not within the ambit of the Nigerian Gas Company, the gas company that controls the price. Under such situation, the gas can vary from $10 to as much as $15.”

However, another manufacturer and President of manufacturers Association of Nigeria (MAN), Dr. Frank Jacobs argued that “if the electricity generating companies were allowed to buy gas at $2.40, there was no reason for manufacturers to buy at $8”.

Business Hilights recalls that MAN had severally complained to President Muhammadu Buhari as well as the Senate President and Speaker of the House of Representatives over the excruciating gas pricing discrepancies between power firms and MAN members for a review so as to encourage local production.

Jacobs noted further that “It is our hope that this year, something will be done about it because manufacturing is supposed to be a priority sector and should be given some concession. Besides, gas is not imported, it is an indigenous product and there is no justification for denominating it in dollars”.

“We have made this position known to the government and we are hoping that they will do something about it.

Unfortunately, ever since the manufacturers had been clamouring for a friendly gas pricing template, the federal government is yet to make a clear statement since last year to date.


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