Manufacturers Seek Stable Gas Price to Enhance Production

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Jonathan Eze
The Manufacturers Association of Nigeria (MAN) has called on the Federal Ministry of Petroleum Resources to immediately address challenges encountered by manufacturers with the pricing of gas.

The association noted that the average price of gas globally ranges between $2.5per scm, whereas in Nigeria, it is $7.45per scm.
The President of MAN, Mr. Ahmed Mansur, made this call during an interactive session on gas pricing.

Acccording to him, “It is worrisome and with this kind of differential, Nigeria manufacturers cannot and may never be competitive.”
Mansur, who was represented by the Group Managing Director/Chief Executive Officer of Flour Mills, Paul Gbededo, noted that the price of gas has become a major source of conflict between manufacturers and gas franchisers.

He pointed out that the persistent increase in the price of natural gas used by our members to power their plants and machineries has reached a crisis dimension. MAN also noted that the continued denomination of price of gas in US Dollars has made the product perpetually exorbitant and gradually getting outside the reach of majority of the manufacturers, particularly the SMIs.

The MAN president added: “These are areas we hope to critically look into and address in order to help the competitiveness of our members and the concerted efforts to improve the current contributions of the manufacturing sector to boost the Gross Domestic Product of the country.”

He, however, explained that necessary technical advice should facilitate the process of moving towards a fair price of gas for the manufacturers for the interest of the economy, with a call on government and oil stakeholders to initiate a functional policy within the government, especially in the resolution of the oil gas pricing issue.

Mansur noted that, ”it is imperative and incumbent on government to clarify the recent confusion over the amendments of the Federal Government Official Gazette No.2, Vol. 106 dated 4th January 2019.

“A new Gazette in the Gas Pricing Framework for Textile Industries surfaces without the inclusion of manufacturing sector as previously indicated in the earlier Gazette vide; Federal Government Gazette No.2 of 4th January 2019, Vol.3: Gas Pricing for Textile and Manufacturing Sector.
“Our members earnestly seek official clarification of the latest position of Government and the operational Gazette they should rely upon to plan their operations and make their business projections,” he added

“Particularly, we hope the outcomes of our engagement will include a definite gas price and a price mechanism that supports industrial production, competitiveness, wealth and job creation, with the accompanying positive multiplier effect on the economy.”

Also speaking at the event, the Chairman Gas Users Group, MAN, Michael Adebayo, said benchmarking of the price of gas to the US dollars had made the process very volatile and was responsible for the various increases in the price of gas witnessed.

Adebayo further noted that benchmarking the price of gas to the dollar exchange rate was not in consonance with the CBN directive of transacting businesses in Nigeria in the local currency.

“Unfortunately, gas franchisers saw this adjustment as an opportunity and used it as the basis to increase prices thereby undermining the Gas Sale Purchase Agreement (GSPA), which was collectively signed by MAN members,” he added.

Adedayo further stressed that gas franchisers should be advised to stop their unwarranted threats of disconnection and issuance of outrageous invoices, which he said was in defiance of the ‘gentleman agreement’ being currently worked out by the federal government on the appropriate gas pricing in Nigeria.