The Sun News

FG to investigate gas suppliers over alleged N100m rip-off

By Adewale Sanyaolu

As part of measures to support the Ease of Doing Business, the Federal Government, yesterday, pledged to launch an investigation into complaints of N100 million rip-off by gas suppliers.

Minister of Industry, Trade and Investment, Mr. Okechukwu Enelamah, gave the assurance during a familiarisation tour of industrial establishments in Ogun and Lagos states, which included May & Baker Plc, Fidson Healthcare Pharmaceuticals and Kimberly-Clark Limited, Lagos.

Enelamah said the essence of the Ease of Doing Business Executive Order recently signed by the Acting President, Professor Yemi Osinbajo, was to ensure that all bottlenecks inhibiting the carrying out of seamless business in the country were removed.

The move to investigate gas suppliers, especially the ones servicing the real sector, is coming on the heels of a complaint by the Managing Director and Chief Executive Officer of May & Baker Plc, Mr. Nnamdi Okafor, that his firm paid about N100 million to some of its gas suppliers for gas not utilised between 2014 and 2016.

Okafor lamented that he spends an average of N500 million annually on power, saying such a huge amount adds to the cost of production and subsequently makes the business unprofitable.

He said gas suppliers have compelled the company to pay for gas not consumed and that all entreaties to make them see reasons why such action was inimical to the growth of the business have not yielded the expected result.

Giving an example of such scenario, he said one of its factories in Ikeja, which has been relocated, was still being billed for gas not consumed several years after shutting it down.

‘‘I had to write to the gas supplier, telling them that the billing should stop because production has been suspended at the particular location. But they wrote back telling us that we have a 20-year gas supply agreement that cannot be truncated,’’ he said.

He said gas tariff should be fair and competitive to manufacturers so that they would be able to break even, adding that a situation where companies continue to pay for gas not consumed was unfair to the business environment.

‘‘Last year was tough for us. Due to the forex crisis, we were not producing for the better part of that year. And to compound our woes, we had to continue to pay for gas not utilised. Workers were idle and yet we had to pay salaries,” he said.

He said the government must urgently address the issue of gas tariff and monopoly in order to save businesses from dying, saying there is only one supplier of gas in Ota and its environs, and that the company sells at whatever price it decides to sell because there are no competitors.

On the other hand, he said the idea of paying for gas consumed locally in foreign currency must equally be looked into, noting that such was compounding the woes of manufacturers.

On his part, Chairman of the Manufacturers Association of Nigeria (MAN), Gas Users Group, Dr. Michael Adebayo, equally advocated a downward review in gas pricing to below $3 under the revised gas policy as well as provide preference for domestic consumers in a bid to revive moribund factories and increase capacity utilisation.

The manufacturers, while commending the Federal Government on the new national gas policy, noted that the move will break monopoly in the sector as breach of collective agreement contained in the Gas Supply and Purchase Agreement (GSPA) had led franchisees to indulge in the habit of exploiting operators and innocent citizens.

The manufacturers also sought the intervention of the Federal Government in giving concessions to industrialists just like what is being given to power generating companies (Gencos) to encourage local production, attract new investments and generate jobs.

Adebayo stated that the growth of the manufacturing sector is being hampered by the huge energy crisis caused by power outages and high cost of petroleum products, adding that many factories have stopped production due to the exorbitant and dollarisation pricing of gas.

He commended the Federal Government for reviewing the gas policy as advocated by manufacturers since last year, saying the new policy, if implemented, will lead to resumption of local production by many manufacturers, which would also enhance competitiveness in the real sector.

Adebayo said manufacturers will be monitoring the implementation of the policy, adding that, “the gazette and pricing template is what we are looking forward to see. The right pricing will be one below $3 as that is the best way to reduce production costs and revive ailing industries. That way, the price of goods will drop.”

Already, the Chairman of Manufacturers Power Development Company Limited, a subsidiary of MAN, Ibrahim Usman, stated that the poor power supply in the country is seriously affecting the manufacturing sector and called for partnership with independent power developers to develop small capacity Independent Power Projects (IPPs) in its industrial clusters.

According to him, the MAN IPP pilot scheme will start in areas where gas is available like Lagos, Ogun and Rivers states, while solar energy will be deployed in the northern region of the country.

“Although there is no one model for all as different states have different needs, talks are ongoing with strategic partners to deploy Liquefied Petroleum Gas/Liquefied Natural Gas in locations like Abuja, Kano, Ibadan, Enugu and Nnewi. It is going to be a case-by-case model for industrial firms. There are foreign technical partners willing to establish smaller capacity solar farms of 5MW to 10MW, even as waste energy will not be left out,” he stated.


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