Manufacturers Flout MAN's Directive on Gas Price
By Crusoe Osagie
Manufacturers in the country may have flouted the directive by their umbrella body, the Manufacturers Asso-ciation of Nigeria (MAN), asking them not to comply with the new gas price regime introduced by gas suppliers.
Negotiations between MAN and gas suppliers in the country namely Gaslink and Shell Gas, recently was deadlocked as both parties could not come to a common ground on the price of gas which had been increased by about 100 per cent.
Consequently, MAN directed its members not to pay the new prices.
However, sources in one of the gas distribution companies revealed to THISDAY yesterday that none of their consumers who are members of MAN had complied with the directive.
"MAN's Directive was unfortunate and inconsistent with good business principles. A call by a credible body such as MAN for its members to disregard agreements mutually reached certanly sends a wrong signal to the investing community," the source said
when contacted for a response to the claim of the gas distribution company, MAN's Public Relations Manager Mr Rasheed Adegbenro, said the association could not join issues without due consultation.
Gas price for industrial consumers was jerked up to N422 per 1000 standard cubic feet from N200 late last year.
In the bid to encourage gas utilisation in the country, Federal Government's gas pricing regime is driven by the price of Low Pour Fuel Oil (LPFO), and is set at about 40 percent of the cost of fuel oil.
LPFO price had been raised by 30 percent in recent times to N21 per litre in line with the government's downstream deregulation policy. While the ex-depot price of fuel oil is now N18 per litre, pump price is N30 per litre.
The issue of pricing has been a key point in government's bid to increase gas utilisation in the country. While producers are continually pressuring the government to raise price to match investments needed to produce the gas, the government on the other hand, wants a pricing regime that would be cheaper than other sources of energy.
Industrial consumers in Lagos who had only recently been converting to gas for energy needs, have complained over the incessant and arbitrary increases in prices.
Firms including Cadbury Nigeria Plc, Dunlop Nigeria Plc and the West African Portland Cement Company, protested to the NGC drawing its attention to the fact that they entered into 20-year agreement with the gas distributors, which provides that any review in prices must be thoroughly discussed by both parties.
Officials of the affected companies said they had invested huge sums of money on gas conversion equipment in line with government's policy of promoting gas utilisation, and that it would raise operating cost significantly should gas price go up.
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