Gaslink, Manufacturers disagree on gas supply terms

By Chima Onwe

The Manufacturers Association of Nigeria (MAN), on Saturday, accused Gaslink Nigeria Limited, a subsidiary of Oando Plc of cutting off Liquefied Petroleum Gas (LPG) supply to about 150 manufacturing companies in Lagos, thereby terminating industrial operations in these companies.

Almost 100 per cent of manufacturers’ operation are said to be dependent on gas.

But Oando countered on Sunday, saying that only debtor companies were cut off from gas supply, and had refused to meet their payment obligations for more than the 60 days grace allowed in the contract terms.

A disagreement

A statement issued by the MAN, said the first customers to suffer from this move by Oando and Gaslink are the companies located in the the Iganmu Industrial Estate in Lagos.

According to the statement, “the decision by Gaslink, which is the operator of the Greater Lagos gas pipeline project, to disconnect its customers arose from a disagreement between the company and manufacturing concerns over the new tariff structure for LPG.”

MAN indicated that manufacturing companies including Nigeria Breweries Plc, Nigeria Bag Manufacturing Company Plc and Sunflag Nigeria Limited are some of the companies affected and have been completely cut off from the Gaslink gas network.

Speaking to NEXT in a telephone interview, Jide Mike, the director general of MAN, confirmed that the statement was issued by his association and that the gas supply has not been restored to the affected companies.

Oando response

But, reacting to MAN, Niyi Olowola, a spokesperson for the Oando Group, disputing the number of customers cut off from supply, noted that “The number of industrial customers which Gaslink serves is just about 90 and so it is illogical for MAN to say the company is targeting 150 firms for the gas supply cut. 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.”

Mr. Olowola said Gaslink only disconnected defaulting customers in its gas grid, noting that “the exercise is an ongoing one, which is in line with the contract governing the 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,” he said.

He added that the allegation that Gaslink cut off gas supply because the companies were not ready to pay a new tariff was unfounded. “There is no new tariff,” he said.

Mr. Olowola also said that it is the government that approves that the price of gas should be bench marked against the price of Low Pour Fuel Oil (black oil). “So the price of gas is just a reflection of the LPFO price,” he said. “If the price of LPFO is N20, we will adjust the price of gas to N20.”

“Gaslink is a responsible corporate citizen showing unparalleled commitment to the industrialisation of Nigeria,” he added.

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Reader Comments (9)

Posted by TATA on Nov 09 2009

don't they have a contract?

Posted by Frankie on Nov 09 2009

The claim by MAN is outrageous...they dont want to pay the bills but still want to use the gas... NEXT...I believe what the story should really be about is natural gas and not LPG as reported...Please verify your information...for your readers sake..

Posted by femi akin on Nov 09 2009

obviously frankie is a ignorant GasLink cohort. & I an end user. to make a long story short : 1.The source of GAs to all distributors like gaslink and shell is same i.e. from NGC or the Federal Govt. So how come Shell sells gas in neighbouring Ogun @ 25 odd Naira per cfm and GAslink want to sell @ 59++!! 2.All companies have paid at the old rate no company is owing. Gaslink has emulated our colonial masters by -divide & rule cutting off some fairly big and medium users but leaving the giants alone like Guiness, Coca Cola , Cadbury Wempco Wahum. Coz they know they cannot survive by cutting the giants off. Cheers to monopoly & jungle justice

Posted by Innocent Oshomagbe on Nov 09 2009

In all, the Federal Government is to be blamed. Why should price of gas be bench marked with LPFO an imported item that we donot have control-- Colonial Mentality. Gaslink can do as it wishes bacause it has the francise to supply gas in these areas--MONOPOLY. What is the work of Monopoly, incease price to any level, consumers do not have alternative or choice. Manufacturers are being advised to use gas because it cheaper than diesel and environmentally friendly, and they are now caught in Gaslink web. Kudos to Government of Yar'Adua, David Mark and Dimeji Bankole.

Posted by Osakwe on Nov 09 2009

You said it brother. Imagine only one person allowed to sell petrol/diesel in Lagos! Or milk !! With one stroke of a pen they want to double their profits.The govt talks about industrialization but supports traders like Gaslink - only now they trade in the Nations' resources.

Posted by Anjibobo on Nov 09 2009

Where are the govt laws regulating the conditions under which pricing can be altered. This should be made public to avoid any monopoly and the attendant negative effects associated with them.

Posted by Anjibobo on Nov 09 2009

I just wanted to add the idea of using gas is a good one for our industrialization process overall, but we have to ensure competition and fair play in its usage.

Posted by Poor Nigerian on Nov 09 2009

Actually, Gaslink is NOT any more of a monopoly than (for example) utility companies abroad. Furthermore, those companies that do not want their gas (and several apparently do not) have simply opted for continuing to use LPFO. It is not by force to use gas, and its use would only makes sense to the extent that its pricing is advantageous. Nevertheless (and so long as the govt regulators are not in bed with Gaslink), Gaslink has to price it's gas to reflect the significant investment that it has made in the gas supply infrastructure in the greater Lagos area (which is much more extensive than Shell Gas has made in Aba and Ogun State). Unlike the NGC, Gaslink is not a govt parastatal that can get away with uneconomic pricing of economic goods.

Posted by tkb on Nov 10 2009

As much as i agree with many comments above about monopoly etc..lets be fair to gaslink and ask a number of questions. When the LPFO prices were low, did they supply gas at low rates? When entering agreements with the industries didnt the industries know and agree that gas prices are benchmarked against LPFO? Why do they want to change the rules of the game in the middle of the game? I respect respectable businesses and i totally agree with the use of gas to drive industrial activities but these guys are in business to, you dont expect them to run at a loss. When the industries started recieving gas at a far lower price than diesel- N24 as against N90, did they reduces the prices of their goods to customers? they should stop crying wolf, pay their fees and lets all pray that the LPFO prices go down so we can drive industrial activities... Using shell etc as an example is not a good one. No one knows the kind of agreement shell has entered with its customers, will a manufacturer reduces his prices just because the next guy reduced his even if it means he will run at a loss? lets be fair guys.