Gaslink resolves dispute with customers

The impasse between commercial gas supplier, Gaslink Nigeria Limited, and some of its debtors is almost resolved as the company concludes plan to reconnect some of them.

Olanrewaju ‘Gbite Falade, the Executive Director, Corporate Development, Oando Gas and Power, said yesterday that Gaslink, a subsidiary of the Oando Group, has mobilised its team to restore gas supply to some the companies who were, last week, disconnected from supply.

Another statement released by Gaslink confirmed Mr. Falade’s position, by noting that, “In deference to the intervention of the Hon. Minister of State for Petroleum, Mr Odein Ajumogobia, a reconnection exercise for a segment of our customer base will commence November 13, 2009 (today). This is to create a window for an amicable settlement and further discussions.”

Mr. Falade, denied allegations by the Manufacturers Association of Nigeria (MAN) that Gaslink was taking advantage of its monopoly in gas supply to arbitrarily hike gas price.

The manufacturers had pleaded with the House of Representatives Committee on Industry to intervene by urging Gaslink to resume supply to all its customers pending the resolution of its disagreement with the association.

Felix Okogie, Chairman, and Jide Mike the director general of the association on Wednesday, accused Gaslink of taking advantage of the monopoly it enjoys as the sole distributor of gas supply to manufacturing companies around the Apapa-Ikeja axis to hike gas price.

The disagreements

The impasse between Gaslink and the manufacturers association began when the company insisted that it will continue to benchmark the price of Liquefied Natural Gas (LNG) with the price of Low Pour Fuel Oil (black oil). This means their customers would pay N59.66K instead of the former N24.21K.

However, the association in a communiqué to its members on September 8, said, “After deliberating strongly on the intention of Gaslink Nigeria Limited to increase the price of gas ...the meeting resolved as follows: existing price of gas should be maintained by all.”

Accordingly, Gaslink last week disconnected some companies in Lagos, from its gas supply network, which forced the affected companies to revert to the use of diesel for their operations, at higher costs.

NEXT gathered yesterday that Gaslink resumed supplies to some of the affected companies, while although some ‘defaulting’ companies have still not been reconnected.

Mr. Falade said based on the August invoice, “Out of the 22 customers that pay below N2 million, 14 were eligible for disconnection and only six were disconnected. Out of the 21 customers that consume between N2 million and N5 million, 15 were eligible for disconnection, only one has been disconnected. Out of the 18 customers that consume between N5 million and N10 million, 16 were eligible for disconnection and only three were disconnected.”

Justifying the disconnection

Mr. Falade argued that Gaslink did not err in benchmarking the price of gas with low pour fuel oil. “We have invested about N36 billion on infrastructure and we are hoping to extend the distribution network to other states outside Lagos. It is the revenue we get from the current supplies that we will use to achieve this,” he said.

He said benchmarking which “is an alternative pricing model” is a universal method of pricing. “We are acting within the ambit of the law,” adding that “Article 11.6 of the terms of contract provide rooms for arbitration for any party of the contract.”

He said Gaslink is working out “palliative that will bring relief to our customers. They can pay a premium for the price of gas to be hedged for a period of time,” he said. “Once this is done, price fluctuation will no longer be an issue.”

Asked why it is only Gaslink out of the gas distributing companies that have reflected the new price of fuel oil on the rate of gas, Mr. Falade said “I cannot speak for Falcon or Shell, but how many companies in Nigeria have invested N36 billion on gas infrastructures?”