About 2,000 manufacturers using gas to power their operations spend an
average of N200bn a month on power generation, investigation by our
correspondent has shown.
The reason, according to manufacturers, is their continued payment for
gas in dollars instead of the local currency.
Each of the manufacturers currently using gas spends an average of N113m
on gas every month, a figure that is brought about by the high exchange rate.
While the global price of gas goes for $2.50, manufacturers in Nigeria
pay $8 for one standard cubic metre of gas.
“An operator who spent N15m a month on gas when the dollar exchanged for
N150 currently spends N45m at the current exchange rate of N450/dollar,” the
Director-General, Nigerian Textile Manufacturers Association, Hamman Kwajafa,
said.
The Chairman, Gas Users Group of the Manufacturers Association of
Nigeria, Dr. Michael Adebayo, said manufacturers had been paying over N100m for
gas since the regime of buying gas in dollars started two years ago.
“Some people spend as much as N127m a month; others spend as much as
N150m a month,” he said.
The manufacturers listed the reversal of the policy on gas as one of the
major catalysts that would make the sector rebound this year.
Adebayo said the government needed to remove manufacturers from the
category of commercial consumers of gas and put them under strategic industrial
sector category.
He said, “Globally, manufacturers are put under strategic industrial
sector among gas consumers. We generate employment. We use the gas; we do not
sell the gas. People that are selling gas are the ones that are supposed to be
on the commercial category, not the people who are using the gas to produce
goods for export.
“It is terrible; nobody can budget. We cannot even increase the price of
what we are selling because people are not even buying.”
Adebayo suggested an amendment to the Gas Subsidy Gazette of 2008 that
put manufacturers in the category of commercial consumers.
A major player in the oil and gas sector and Managing Director of Falcon
Petroleum Limited, Prof. Joseph Ezigbo, told our correspondent that gas was
benchmarked in dollars because of government policy and the cost of gas
flaring.
He said, “It is very expensive to bring gas out of the ground. In the
past, our gas was cheap because it was a by-product of oil; so, the gas was
already paid for along with the payment for oil.
“But now, we are billing for gas exclusively and the cost of producing
just gas alone is higher. So, comparatively, if you put gas and diesel side by
side, the gas is still cheaper.”
He added, “The government took a deliberate action to fix the price of
gas so that people will not sell differently.
“But there is a proliferation of willing-buyer-willing-seller situation
where people are buying not within the ambit of the Nigerian Gas Company, the
gas company that controls the price. Under such situation, the gas can vary
from $10 to as much as $15.”
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