Manufacturers advocate below $3 pricing under revised gas policy

By Femi Adekoya   |   12 July 2017   |   2:21 am

The manufacturers also sought the intervention of the Federal Government in giving concessions to industrialists just like what is being given to power generating companies (GENCOs) in order to encourage local production, attract new investments and generate jobs.


•Hail govt review of gas policy

The Manufacturers Association of Nigeria (MAN) Gas Users Group has advocated a downward review in gas pricing to below $3 under the revised gas policy as well as provide preference for domestic consumers in a bid to revive moribund factories and increase capacity utilisation.

Indeed, the manufacturers hailed government’s revision of the gas policy noting that the move will break monopoly in the sector, as breach of collective agreement contained in the Gas Supply and Purchase Agreement (GSPA) had led to a situation where franchisers are indulging in the habit of exploiting operators and innocent citizens.

The manufacturers also sought the intervention of the Federal Government in giving concessions to industrialists just like what is being given to power generating companies (GENCOs) in order to encourage local production, attract new investments and generate jobs.

In a chat with The Guardian, the Chairman of MAN Gas Users Group, Dr Michael Adebayo, stated that the growth of the manufacturing sector is being hampered by the huge burden of energy crisis caused by power outages and high cost of petroleum products, adding that many factories have stopped production due to the exorbitant and dollarization pricing of gas.

He commended the Federal Government for reviewing the gas policy as advocated by manufacturers since last year, saying the new policy, if implemented, will lead to resumption of local production by many manufacturers, which would also enhance competitiveness in the real sector.

Adebayo said manufacturers will be monitoring the implementation of the policy adding that “the gazette and pricing template is what we are looking forward to see. The right pricing will be one below $3 as that is the best way to reduce production costs and revive ailing industries. That way, the price of goods will drop.”

Already, the Chairman of Manufacturers Power Development Company Limited, a subsidiary of MAN, Ibrahim Usman stated that the poor power supply in the country is seriously affecting the manufacturing sector and compelled it to partner with independent power developers to develop small capacity independent power projects (IPPs) in its industrial clusters.

According to him, the MAN IPP pilot scheme will start in areas where gas is available like Lagos, Ogun and Rivers states, while solar energy will be deployed in the Northern region of the country.

“Although there is no one model for all as different states have different needs. Talks are ongoing with strategic partners to deploy Liquefied Petroleum Gas/Liquefied Natural Gas in locations like Abuja, Kano, Ibadan, Enugu and Nnewi. It is going to be a case-by-case model for industrial firms. There are foreign technical partners willing to establish smaller capacity solar farms of 5MW to 10MW, even as waste energy will not be left out,” he stated.

Speaking on the policy review, the Ministry of Petroleum Resources, in a statement by its Director of Press, Idang Alibi, said the policy document builds on the policy goals of the Federal Government for the gas sector as presented in the 7 Big Wins initiative developed by the Ministry and the National Economic Recovery & Growth Plan, ERGP, 2017 – 2020.

He said: “The gas policy intends to move Nigeria from an oil-based to an oil and gas-based industrial economy, which will be driven by the core principles as shown below: Separate the respective roles and responsibilities of government and the private sector; establish a single independent petroleum regulatory authority.

“Implement full legal separation of the upstream from the midstream; implement full legal separation of gas infrastructure ownership and operations from gas trading; Realise more of the LNG international downstream value; Pursue a project-based, rather than a centrally-planned domestic gas development approach.”

Others, he said, includes: “Make a strong maintenance and safety culture a priority; Implement international best practice for environmental protection; Establish strong linkages with electric power, agriculture, transport and industrial sector; Establish payment discipline throughout the energy chain. “Honour stability of contract terms; Ensure security of assets and ensure compliance with the Nigerian Content Act.”




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