Manufacturers seek Reps' intervention on gas supply

The Manufacturers Association of Nigeria yesterday appealed to the House of Representatives to order Gaslink Nigeria Limited to resume supply of gas to companies which shut down last week after Gaslink increased gas tariff.

The association also asked the lawmakers to prevail on the company to revert to the old price for gas which stood at N24.21 per cubic meter.

Gaslink recently increased its rate to N59.56, citing the published price of the Low Pour Fuel Oil (LPFO) - for which local gas pricing is benchmarked against by the government - as a reason for the increase. This means the price depends on the LPFO price which is largely controlled by international market forces.

The company which is a subsidiary of Oando Plc. is the sole supplier to many companies in Lagos State. The representatives of association however said other suppliers of the product have kept their prices unchanged despite the change in fuel pricing.

"We do not believe this is how to move the manufacturing sector forward," the Director General of the association, Jide Mike, told the House committee on Industries in Abuja. "Government encouraged industries to change their source and use gas in the past, and now, this is the result."

New rate, a secret

Gaslink in a press statement released yesterday admitted that it had terminated supplies to an unstated number of companies last week, in reflection of the LPFO price but did not name its new rate.

"It is also to note that when international LPFO rates are low, the gas price is also reflective," the statement read. "As a result of our gas supply, industries have been able to reduce their fuel costs on the average by as much as 50 per cent and return billions of naira in profitability. It is therefore unfair that these same industries complain about paying appropriately for the very resource that drives their increased profitability."

Comments such as this heightens the association's position on the issue, accusing the gas company of pushing a profiteering venture and not necessarily abiding by the LPFO benchmark rule alone.

"No one knows how much they purchase the gas from the Nigeria Gas Company, and they keep that as a guarded secret," Mr. Mike said.

Both groups say the shutdown is an ongoing exercise, making it difficult to determine the exact number of the affected companies. Representatives of the association on Monday gave figures of between five and 30.

During the weekend, the number was fixed at about 150.Gaslink however refuted this, saying before the current crisis its grid wasn't feeding up to 100.

The committee chairman, Simeon Agidani, said though his committee may not have much powers to give such orders, the plenary will debate on the issue as a matter of urgent national importance, before giving any relieve as prayed.