Crusoe Osagie
10 November 2009
Lagos And Onwuka Nzeshi in Abuja — Manufacturers Association of Nigeria (MAN) yesterday raised the alarm over the crisis facing the nation's manufacturing sector following the increase in gas tariff and the discontinuation of supply to some industries, particularly those in Lagos State. Consequently, the organisation claimed that no fewer than 30 industries had been shut or forced to operate partially.
Manufacturers and Gaslink Nigeria Limited, the major gas supplier to industries in Lagos, are locked in a disagreement over the upward review of gas price by the latter. MAN has directed its members not to pay the new tariff. While listing the impact of the face-off at a meeting with the House of Representatives Committee on Industries, MAN Director-General, Mr. Jide Mike, who briefed the lawmakers alongside the Chairman of the Gas Users Association, Prince Felix Okogie, said the dispute arose from the unilateral increase in the price of gas by Gaslink. According to him, Gaslink recently announced an upward review of tariff from N24.21k to N59.66k on the ground that the price of Low Pour Fuel Oil (LPFO) had equally increased. In a report by THISDAY last Saturday, MAN had hinted that some 150 manufacturing companies in Lagos might be cut off from gas supply by Gaslink. It noted that production had already stopped in Iganmu Industrial Estate. Major industries affected by the crisis include the Nigeria Bottling Company Plc, Nigerian Breweries Plc, Nigerian Bag Manufacturing Limited (BAGCO) and Sunflag Nigerian Limited, Dangote Sugar and Kuramo Plastic Industries.
Gaslink, however said it had only disconnected defaulting customers from its gas grid as a routine measure to get customers to pay for what they consume. In a statement made available to newsmen in Abuja, Gaslink said the affected customers were disconnected after the expiration of the contractual 30 days period of grace. "Please note that this is an ongoing exercise, which is in line with the contract governing our relationship with our customers. Such affected customers become eligible for disconnection after the contractual 30 days credit period, and a subsequent 30 days of grace. The claim of disconnection of 150 industrial customers is sensational. To date, Gaslink has less than 100 industrial customers connected to its gas grid, many of whom are paying their bills as, and when due," Gaslink said in a statement signed by its Head of Corporate Communications, Meka Olowola. "Gaslink is a responsible corporate citizen showing unparalleled commitment to the industrialisation of Nigeria.
To date, we have invested over $225 million to provide the much required infrastructure to aid the manufacturing industry. No other gas distribution company in the country has been able to match the level of our investment so far," the gas firm said. At yesterday's meeting with the lawmakers, Mike said Gaslink, "claimed that gas price should also be benchmarked on the price of LPFO. This is unacceptable to us because the new tariff is not affordable to us except they want the collapse of all industries that are using gas. In the last five years, government has encouraged industries to use gas and most industries have invested huge amount of money to change their machineries to use gas and now Gaslink wants to kill all industries through price increase". The MAN boss recalled that in the 1980s, capacity utilisation in the manufacturing sector was over eighty percent (80%) but had now declined to as low as thirty per cent (30%). The sector, according to Mike, which employed over 1.5million workers now has less than 500,000 employees. Chairman, House Committee on Industries, Honourable Solomon Agidani, while expressing dismay at the development, warned that the current situation could lead to the closure of more manufacturing firms, job losses and relocation of firms to neighbouring countries.
Agidani said the committee would take up the challenge and ensure that the dispute was resolved as soon as possible to avoid unpleasant consequences on the economy. In the interim, he said, Gaslink should maintain status quo on the gas tariff issue. Also speaking with THISDAY yesterday, MAN President, Alhaji Bashir Borodo, said members of the association who had been disconnected by the Oando subsidiary and those who are yet to be cut off, had been directed "not to succumb to what they consider a subtle economic sabotage by Gaslink". "Mobil has not increased its gas tariff, neither has Shell Gas increased its tariff, only Gaslink is pushing this tariff increase agenda and all these companies get their gas from the same source and at the same price and so we wonder what the rationale for tariff increase is," Borodo said. He further said, "we have told our members not to pay the new tariff.
They say they are the suppliers and they think they have ultimate powers but they need to know that we are the market. If we do not take their gas let us see who they will give it to". Chief Executive of the Nigeria Textile Manufacturers Association (NTMA), Mr. Jaiyeola Olanrewaju, who said members of the association were waiting eagerly for the outcome of the meeting between MAN and government, lamented the move by Oando, describing it as a devastating blow to the already dying industrial sector. "They disconnected people without finalising the negotiations over their intention to jack up prices. Other gas suppliers in the country are not increasing prices why is the hike in prices only peculiar to Gaslink? They always say they have invested in infrastructure so as to get the gas to manufacturers and that this is the reason why they have to raise prices but the other suppliers who have not raised prices also invested in infrastructure," Olanrewaju stated. A meeting was being held between the Federal Government and MAN as at press time.
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