Dangote urges multinationals to explore coal option as gas scarcity bites

Aliko Dangote, president of Dangote Group and Africa’s richest man, wants manufacturers, especially large corporations and multinationals, to explore the option of using coal in the face of gas scarcity.

Nigerian manufacturers face gas scarcity, amid incessant power outages that inhibit production at factories. Gas price in Nigeria is also $5 higher than it is in the international market, thus raising the production costs of manufacturers.

“Some of the bigger industries should convert to coal,” Dangote said at a presidential dialogue organised by the Lagos Chamber of Commerce and Industry (LCCI) last Thursday.

“Coal is cheap, and government has given a lot of incentives on coal exploration. Virtually everything is zero,” Dangote said.

Nigeria’s manufacturers devote 30 to 40 percent of their expenditure to alternative energy sources, according to the Manufacturers Association of Nigeria (MAN).

Power outages at major industrial zones range between five and six each day, which is dangerous for productive activities. Such outages destroy essential products during production, thereby raising production costs which, at the moment, is difficult to be passed onto the consumers at a time incomes are shrinking owing to economic recession.

Jide Mike, former director-general of MAN, gave a graphic picture of what manufacturers are passing through.

“In 1999 government encouraged manufacturers to use gas. The price of gas then was affordable. In 2010 gas suppliers raised prices, but this made it difficult for us as it increased our production costs. Government then intervened and the price was only raised by 15 percent. In 2015 the price of gas was raised astronomically,” he said.

“If government wants the productive sector to support diversification, they need to intervene. Manufacturers are thinking of reviving the old use of the Low-Pour Fuel Oil (LPFO),” he added.

Mike said gas suppliers dollarise gas payments, which according to him, is illegal, adding that government needs to come in to encourage foreign direct investment (FDI).

“If you want to encourage FDI, you will know that any investor who comes in will look at the price of gas,” he stated.

Many organisations such as Dangote, Ashaka, Cement Company of Northern Nigeria, among others, are either building coal-fired plants or using same fir production. Manufacturers prefer the use of gas as it is cheaper than diesel.

ODINAKA ANUDU