Gas shortage worsens manufacturers’ plight

Many industrial concerns are likely to reduce operations and further lay off workers due to shortage of natural gas for their operations resulting from the consistent attacks by the Niger Delta militants on oil and gas infrastructure.

Many companies across Nigeria depend on natural gas supply from the Nigeria Gas Company (NGC) for their productions, as it is cheaper and cleaner.

The gas, which comes through the Escravos – Lagos Gas Pipeline and which also services the largest power plant in the country, Egbin, has been a subject of major attacks in recent time. This has impacted adversely on gas supply through this infrastructure to the extent that the Egbin Power Plant, which has the capacity to generate 1,230 megawatts, is now struggling to generate just about 400 megawatts.

Last week, the supply of gas for industrial use was almost zero as manufacturers who have connected to industrial gas supply had to resort to diesel, which is expensive and could not sustain production for a long time.

Oluremi Bodunrin, plant manager of Nigerian Bottling Company (NBC), who was disturbed by the poor supply of gas, confirmed last week that some manufacturers who are already facing myriad of crisis had to rely on diesel for production.

“Diesel is expensive and continuous dependence on it by manufacturers will create more crises for them and they will not sustain the businesses,” he said last week during a tour of NBC plants in Lagos by newsmen.

“Now, I’m in pain. Most of us in Lagos are competing, as we have been able to move away from diesel. Running diesel generators at a point is about five times the cost of running gas. There is no manufacturer in Lagos state who can run solely on diesel; he will not compete, unless the manufacturer is dealing with products that are not comparable and competitive. If the products are competitive on quality and standards, he will not survive on diesel,” he said.

Bodunrin recalled that when things were good, manufacturers were running up to 85 percent to 90 percent on gas. It was that good at a time but in the last two months, it has been rocky and towards the last two weeks, it’s been really bad, he said. It is suspected that little available gas is channelled towards electricity supply, which is not even enough as Nigerians still experience daily blackout. The continued pipeline attack by the Niger Delta Avengers and other militant groups is bad news for both manufacturers and the nation, as destruction of gas pipelines is creating shortage of gas for manufacturing activities and for electricity supply.

If unchecked, this situation according to analysts would further worsen the condition in Nigeria’s manufacturing sector. Analysts recall that the Nigerian manufacturing sector, which has been reducing workforce, has been performing poorly as its contribution to GDP has declined from about 10 percent to 7 percent.

The Niger Delta Avengers, the latest militant group in the Niger Delta region, said to be heavily armed, emerged recently to demand for emancipation of the region. In the last few months, it has blown up oil installations in a destructive campaign, which threatens the Nigerian economy, as the country relies on oil for about 80 percent of its revenue.

Kemi Adeosun, minister of finance, admitted recently that the renewed activities of the militants in the Niger Delta were seriously affecting the nation’s oil production, which the economy relies on.