Manufacturers’ asking price of gas not tenable

Manufacturers’ $3 asking price for one standard square metre (scm) is not possible and sustainable, experts say.

“For a gas producer, because he is a primary owner of his resource, he can price his product for any price. He has his template and you can’t say it’s right or wrong.,” said  Ayodele Ikumapayi, managing director of a, ASB Valiant, a power generation and energy solutions company.

“From the gas producer, there is a requirement to move the gas from the facility to end users. If you look at Niger Delta and you are pricing gas at $3, the gas at $3 will be transported to Lagos. The gas supplier will be using NGC pipeline. The Nigerian Petroleum Development Company (NPDC) will charge a premium and for the distribution, there is a premium. The national gas price for the off-take today is $7.45 and the consideration is to have a concession with respect with due hours. We do not see the feasibility of $3 gas but we think there can be an improved price below $7.45, especially to motivate manufacturers to support industrial growth,” Ikumapayi said.

Micheal Ola Adebayo, chairman of the Manufacturers Association of Nigeria (MAN) Gas Users Group, had told Real Sector Watch last week that manufacturers would want the price to go below $3 or at most $3.

“The international price of gas is less than $3, so why should we pay $7.48 for a standard square metre? I don’t know how the local manufacturing industry will survive this,” Adebayo lamented.

But experts who spoke with Real Sector Watch said any attempt to fix gas price would stifle the free market mechanism, resulting in scarcity, erosion of profits and untold hardship in the economy.

ODINAKA ANUDU