Nigeria's foremost Online Energy News Platform

Nigerian manufacturers await reduction in gas price

Manufacturers who use gas to power their plants are eagerly awaiting the implementation of a new directive from the government that the product should be sold for $3.85 per standard cubic metre.

Speaking exclusively to our correspondent on Thursday, the Chairman, Manufacturers Association of Nigeria Gas Users Group, Dr Michael Adebayo, said that the government had in its gazette Number 2 of January 4, 2019 directed that the price of gas should be cut from $7.62 to $3.85.

He said that the gazette was signed by the Minister of State, Petroleum Resources, Dr Ibe Kachikwu.

He said some franchise holders to the gas companies were not comfortable with the reduction in price.

According to Adebayo, the marketers are still querying the price slash while some of them have even increased it to $7.86.

“The government has said that they will call all the stakeholders together for the proper implementation of the price and we are hoping that after the elections, the issue will be resolved.

“But I will urge the Nigerian gas marketing companies to call their franchise holders to order, because they were there when the price was reduced, so they don’t have to go around threatening that they are going to disconnect our members.”

Manufacturers had consistently queried the sale of gas in dollars amid continued depreciation in the value of the naira and the high cost of production in the country.

They had said that apart from the fact that the price of gas in Nigeria at $7.65 per standard cubic metre was too high compared to the global price of $2.50 per SCM, the sale of gas in dollars was in contravention of the Central Bank of Nigeria’s directive that businesses transacted in Nigeria must be in the local currency.

A manufacturer of steel products, Prince Oba Okojie, argued that the price charged by gas companies was not the original price agreed between the government and the manufacturers.

In defence of the gas sellers, a major player in the oil and gas sector and the Managing Director of Falcon Petroleum Limited, Prof Joseph Ezigbo, maintained that the price of gas being sold in Nigeria was cheap considering the cost of flaring and other factors.

He said, “You need to find out what it cost to bring the 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.

He added, “The government took a deliberate action to fix the price of gas so that people will not sell differently.

“But there is now 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 price can vary from $10 to as much as $15.”

Source: The Punch