‘It’s either FG comes up with new gas pricing or manufacturers may pack up’
In a meeting of Gas Group of the Manufacturers Association of Nigeria (MAN) in Lagos, has expressed deep concerns over the high price of gas offered to manufacturers in the country, saying sooner than later, many production lines will pack up.
This was the key submission of the group during a recent gas interactive session in Lagos to review happenstances in the nation’s gas industry and the trending declaration of year 2020 as Nigerian year of gas revolution.
In his remarks, Timothy Okon, a gas expert and former Senior Technical Adviser to the immediate Minister of State for Petroleum, Dr Ibeh Kacukwu observed that the best option is for the government to hasten activities in coming up with new regulation that will effectively address issues bordering on gas pricing, monopoly and licensing.
He added that the Federal Government must work on such bill so as to enable National Assembly do the needful as soon as possible so that the expected law would address structural issues in the industry.
Giving further emphasis, Okon averred that “In the lobby contemplated that will be passed in June, monopolies will not be allowed, because a new regulator not DPR, but a new entity will regulate and license the activities of distribution companies and once that law comes into effect, it would address the structural issues in the industry, such as price fixing. All these things are in the proposed relegation just that it has not been promulgated. What this would do is to take us back to willing buyer-willing seller arrangement.
“We do not anticipate the government fixing the price of gas. It is not the role of the State, but what we expect is that commercially derived pricing arrangement such as the Export Parity Price (EPP) which is not set by government will form the basis of the pricing while the pricing formula will now be in the regulation.”
“The principle legislation should be passed in June of this year which the first will be the gas pricing regulation that will come out of the new regulation. It will not be fixing the price of gas; its intention is to make sure pricing is market-based and not imposed by monopoly. It will check market abuse and it would allow you to have market-based contracts where prices will reflect in the markets.”
He argued that differential pricing is at the heart of aggregation, adding that “without differential pricing, gas suppliers will have difficulties to supply gas, there will be a preference to supply gas only to certain sectors and we want to ensure that those who need gas get it at a market-based price and not a price to be fixed.”
Backing Okon, the Director, Corporate Communications of MAN, Ambrose Oruche, who represented the Director General of MAN, Segun Kadir, said “Nigerian production sector is already beset with myriads of challenges of which power remained the worst.”
“We have cried out to the government and nothing yet has been done so far. We have a situation where gas franchises are threatening further increase in the price of gas. We have to put a stop to this. We need a new regulation that would regulate the gas industry.”
While calling for the classification of manufacturers as a strategic industry under the gas master plan, MAN executive urged the Federal Government through the Ministry of the Petroleum Resources to suspend any gas increase especially now the economy is ailing.
According to Kadir, “Many jobs would be threatened if the price of gas is increased. Already, several manufacturing outfits have already closed shops due to the harsh operating environment in the country.
MAN made it clear that “After conducting a survey, we observed that the energy cost accounts for over 40 per cent of the cost of production. This is disheartening, so any gas price increase would only impact negatively on our operations.”