Leadership (Abuja)
Stevin A. Adikwu and Moses John
15 November 2009
Abuja — The chairman of the House of Representatives Standing committee on Industry, Hon Solomon Agidani, has called for appropriate pricing of gas to stem eminent collapse of major manufacturing concerns, which had reconsigned their plants in compliance of government's new push to encourage use of gas as the cost effective means of production.
He said the present arrangement where the price of gas is benchmarked on the price of LPFO was no longer realistic. He said if it was sustained, it would defeat the federal government's initiative at encouraging the use of gas for industrial purposes.
Agidani spoke to LEADERSHIP SUNDAY in the wake of a petition addressed to the House by the Manufacturers Association of Nigeria jointly signed by the director general, Jide Mike, and the chairman, MAN Gas Groups, Prince Felix Oba Oloju, following alleged severance of gas supplies to five major manufacturers in Lagos by Gastink Nigeria Ltd.
This is owing to about 200% price hike in gas as government stepped up implementation of its much-touted deregulation of the downstream sector of petroleum products. At least 150 manufacturing plants that are gas-complaint in Lagos stand the risk of being shut down if the disputed requirement is maintained. Recently, price of gas was increased from N24.21 to N59.66 per standard cubic measure.
Even as the increase violates earlier agreements brokered by the Senate Committee on Industries in 2008, which passed the increase at 15 percent, Agidani said there was no justification for any increase in view of the fact that gas is being flared for nothing, and the industries which had only recently become gas-compliant must be protected and encouraged to survive.
He said the capacity utilisation of Nigeria industries in mid-80's was 80 percent and employed over two million Nigerians but this has dropped to below 30 percent, adding that government decided to put a stop to gas flaring because it is dangerous to the environment.
He said industries that retooled and became gas compliant were now faced with gas prices competitiveness, thereby daring any hope of cost reduction because the price of gas is benchmarked on the prices of LPFO.
He asked Gas Link Nigeria to stay action pending government's response on the issues adding, "We must bring down the price of gas so that we can popularise it usage."
It will be recalled that in 1999, the federal government took effective steps to stop gas flaring and encourage exploitation of the country's vast reserves by distributing gas to industrial consumers through pipelines. It was this initiative that encouraged manufacturers to invest heavily in conversion of production process and train personnel to be compliant with the change over Gaslink Nigeria Ltd, because of the monopoly company for its supplies.
Hitherto companies were on the verge of collapse due to high cost of diesel and other conventional energy sources and recourse to gas was a welcome relief to most firms that converted to its use.
The minister of labour and productivity, Prince Adetokunbo Kayode, has appealed to the gas operators nationwide to desist from disconnection of gas supplies to industries and establishments in the country.
Prince Adetokunbo Kayode, SAN, while speaking with a delegation from the Manufacturers Association of Nigeria (MAN), Thursday, stressed that the federal government is making efforts to ensure that factories are working in full capacity.
He said that the federal government would not take the situation whereby Nigerians are out of work.
Prince Kayode emphasised that government would not compromise further collapse of the industrial sector in the country, adding that government would not fold its hand towards any attempt to distract its current focus on job creation and stability of economy of the nation.
He appealed to the management of Gas link Companies to forward their grievances to the appropriate government authorities responsible for oil and gas for peaceful resolution.
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