The Manufacturers Association of Nigeria (MAN) has called for government’s clarification in the re-categorisation of gas users under the new gas policy, in its bid to manage the rising cost of production being borne by local producers in the country.
The manufacturers said while the articulation of the National Gas Policy, which has already been gazetted, is highly commendable, certain fundamental issues of concern to them should be urgently addressed.
They are also raising concerns over the recurring issue of frequent increases in the price of gas by franchisers. According to MAN, a recent circular from the Nigerian Gas Marketing Company Limited (NGMCL) stated that the 2018 gas price for the commercial sector has been increased from $7.45/mscf to $7.62/mscf with effect from January 1, 2018.
MAN in a letter to Aisha Abubakar, the minister of state, industry, trade and investment and signed by Segun Ajayi-Kadri, the association’s director-general, affirmed that the existing categorisation of manufacturing sector as ‘Other Commercial sector’, has left bigger room for abuse by the franchisers, which is one of the issues that MAN believes the new National Gas Policy should address.
Citing the challenges encountered by the local producers under the new gas pricing regime, AjayiKadir said: “There have been supply gaps and its accompanied constraints on local users as a result of the preference for export at the detriment of domestic demand.
“The recent incessant increases along with subtle harassments of our members by the franchisers constitute an unhealthy business environment and is destabilising our members’ business operations”.
He, however, prayed the minister to re-categorise manufacturers from commercial sector to strategic industrial sector (similar to the textile subsector) since they use gas to power machinery and equipment.
It asserted that: “This we feel, is inappropriate when viewed from the current effort by government to stabilise the gas industry and address all the issues affecting relationship between the users and the producers of gas in Nigeria. We would appreciate government’s intervention and kind consideration of the issues raised above in order to accelerate the performance of the manufacturing sector as the engine of growth.”
“Even though we are not unmindful of measures being put in place by government to address some of the lingering problems of gas supply and its associated issues, we are constrained to put forward the following prayers: This re-categorisation should cover all the industrial sectors with a view to reducing the high cost of production while further making Nigerian industries more competitive globally.
“Therefore, a wholesale implementation of the National Gas Policy with its attendant benefits and status is requested. The status should be accorded to all industrial strata so that those who are heavy users of gas; such as steel, cement and glass industries as well as others with lesser consumption of gas will be on board,” he added.
Dada Thomas, managing director of Frontier Oil and the president of the Nigerian Gas Association (NGA), on the issues raised by MAN, blamed the government for the frequent friction between manufacturers and gas producers, saying government does not have any business in gas pricing, as the exercise should be on a willing buyer, willing seller agreement.
In an interview with business a.m., he said: ‘‘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 roundtable and discuss what the price should be. “The friction is also due to the foreign exchange exposure as the frequent changes in pricing complained about by manufacturers were not from us but the rates in the international market,” he further said.