Allow players fix gas price, expert urges FG
Gas
By Yunus Yusuf, 08023289519
Lagos, April 12, 2018 (NAN) A gas expert, Mr Dada Thomas, has urged the Federal Government to allow gas producers and buyers to fix gas prices, in order to bring an end to the constant friction between both parties.
Thomas, who is also the president of Nigerian Gas Association (NGA) made the appeal in an interview with the News Agency of Nigeria (NAN) in Lagos on Thursday.
He said that this became necessary against the backdrop of the crisis brewing between members of the Manufacturers’ Association of Nigeria (MAN) and gas producers, over a recent hike in gas price.
NAN reports that MAN had sought government’s intervention in re-categorising gas users under the new gas policy, in a bid to manage the rising cost of production being borne by local producers.
According to Thomas, government should be blamed for the frequent friction between manufacturers and gas producers.
He said government does not have any business in gas pricing, adding that gas pricing should be on a willing buyer, willing seller agreement.
“For government to be meddling in gas pricing is not healthy for the sector. The best approach would be for all parties involved, including gas transporters, to come to a round table and discuss what the price should be.
“ But in a situation where government continues to fix prices, we may not get out of this cycle,’’ he said.
The NGA president said that the decision of government to grant manufacturers a special window of allowing them pay for gas in naira, as against the international practice of paying in dollars.
Thomas said this decision, coupled with the devaluation of the naira, has become a bottleneck for manufacturers because whenever there is a change in exchange rate, gas producers will change their prices in order to reflect their actual costs in naira.
‘‘The payment for gas in naira is another major crux for manufacturers. $7.20 in 2015 at N190 to a dollar is different from $7.20 at N306 or N360 to a dollar in 2018, depending on where they source their forex from.
“For the manufacturers, they are looking at the few changes in cents which would eventually jerk up what they are paying. But on our part as gas producers, the price has not changed in dollars.
“We are not the ones that devalued the naira, the government did. We are not equally in charge of monetary policies. So why heaping the blame on gas producers, he added.
Thomas, who is also the Managing Director of Frontier Oil Ltd, said contrary to the believe by manufacturers that gas producers were making more money, he said a larger portion of the money that makes gas to be sold at $7.26 in Lagos can be traced to transport costs, which do not come to them in the upstream.
NAN also report that MAN in a recent circular from the Nigerian Gas Marketing Company Ltd (NGMCL), is challenging the 2018 gas price for the commercial sector which has been increased from $7.45/mscf to 7.62/mscf with effect from January 1, 2018.
MAN, in a letter to the Minister of State, Industry, Trade and Investment, Hajia Aisha Abubakar, and signed by the association’s Director-General, Segun Ajayi-Kadir, said that the existing categorisation of manufacturing sector as ‘Other Commercial sector’.
The manufacturers said this has left a bigger room for abuse by the franchisers, which is one of the issues that MAN believes the new National Gas Policy should address. (NAN)
YO/PIO/PIO
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(Edited by Idonije Obakhedo)