Gas Prices: Distributors, Industrialists on Collision Course
By Chinazor Megbolu
The recent hike in price of gas supplied to industries, at the weekend further deepened the row between industrial users and gas distributors.
This followed the call by the Lagos Chamber of Commerce and Industry (LCCI) on the Federal Government to immediately direct the downward review of price to boost usage of the commodity.
Gas distributors however, argued that concessions have been granted the industrial users in terms of the pricing.
Gas price for industrial consumers was jerked up to N422 per 1000 standard cubic feet from N200 last year.
According to LCCI President, Chief Olusola Faleye, the current pricing policy on gas "is certainly not in consonance with the professed commitment of the government to the revitalisation of the industrial sector."
"Nigeria is blessed with abundant gas reserves to make the use of gas cheaper as a source of energy. We urge the government to review its current gas pricing policy," said Faleye.
According to the LCCI boss, Nigerian industriala outfits had invested heavily on the conversion of plants to gas-based energy source, following government's push for the us eof natural gas as a source of energy.
Faleye said the hike in gas price has put many manufacturers in a quandary.
Speaking to THISDAY on the issue, the Head of Marketing, Gaslink Nigeria Limited, Mr. Kunle Adeyanju, said his company had on the other hand, been trying to provide incentives to gas users.
"As at August 1, 2004, our customers were given a discount of about 23 percent on the price of gas, depending on terms of contract," he said.
Adeyanju said further that the discount was a special boost to gas users considering the fact that the price of fuel oil, upon which gas price is calculated, as in fact gone up.
"There is no reason for industries to complain," he added.
In the bid to encourage gas utilisation in the country, the 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.
Firms like Cadbury Nigeria Plc, Dunlop Nigeria Plc and the West African Portland Cement Company, are known to have protested to the Nigerian Gas Company (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.
As the controversy ranged, the Manufacturers Association of Nigeria (MAN)has had to direct its members at a point, not to pay the new price of N422 per thousand standard cubic feet
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