Multi-billion Naira Investments Threatened As Industries Groan Under Gas Supply Shortage To Lagos, Ogun
By Abimbola Abdullahi
Scores of industries in Lagos and Ogun state are currently groaning under shortage of gas supply, which has continued to threaten their productions.
The companies, which are already complaining of excessive cost of energy are being forced to shift to diesel or cascade filling system which have eaten deep into their financial books.
Investigations by SlyeNews revealed that the industries pay about N118 per standard cubic meter (SCM) for gas through the pipelines, but the situation has forced them to either pay N733 per liter on diesel or N180 per SCM for gas in the cascades. This situation is making it tough for the industries to willingly switch to alternative source of energy, due to the cost implications.
The chronic supply of electricity by distribution and generation companies, manufacturers and other big businesses and organisations rely on gas to generate power for their operations.
Already the, several of the affected industries are now considering staff rationalization, which might worsen the unemployment in the country, if urgent actions were not taken.
Some of the industries suspected that the gas supply might have been diverted to a giant facility recently flagged-off in Lagos.
The new development, according to stakeholders will have dire consequences on the economy, and might jeopardise the ‘Decade of Gas’ agenda of the Federal Government to encourage more investments in gas infrastructure and greater dependence on gas usage between 2021 and 2023.
There has been plethora of complain letters from gas users to the off-takers on the paucity of supply. In one of those letters sighted by SlyeNews, the industry lamented to have suffered shortage of gas for about three months now.
“We cannot continue to cope under such circumstance and we hereby bring to your notice the danger of gas shortage to our operations. It would be appreciated if your company take urgent look into whatever challenges therein and ensure steady supply to our facility,” the firm stated.
The gas-marketing firms are also groaning under the poor supply. These includes, Shell Gas, Green Fuels Limited, Axxela Limited, NIPCO Plc, Greenville Oil and Gas Company Limited and Powergas Limited, among others.
A top source in one of the marketing firms, who prefers anonymity said: “For the past six months, there have been very low gas in our pipeline and the pressure is not enough to undertake any commercial activity. The industries are suffering, we need the authorities to look into this matter and ensure improvement in gas supply to aid our industries.
“Gas is the new global agenda and Nigeria should not lag behind. The current situation we are experiencing is jeopardizing the “Decade of Gas” agenda of the federal government. If we are to achieve that mission, we should start feeling the effect from now, not retrogressing trend,” the source stated.
There are over 3824 in Ogun state, industries, according to the state government, have invested in excess of $200 million. Lagos State is the nation’s economic nerve with a presence of over 2,000 manufacturing companies. Several of these firms, which rely on gas for their operations are currently in limbo, as gas supply pressure reduced drastically and inadequate to undertake any commercial operation.
The Manufacturers Association of Nigeria, (MAN), had earlier noted that energy supply remains a major challenge facing manufacturers as 40 per cent of their expenditure goes into sourcing of energy for production activities.
Recent data from MAN showed that expenditure on alternative energy sources by members amounted to N117.38 billion in 2017; N93.11 billion in 2018; N61.38 billion in 2019; N81.91 billion in 2020, and N71.22 billion in 2021.
Another source said his company has invested billions of naira in gas infrastructure but the current situation is a threat to that investment.
“It is making the industries bleed. They are very apprehensive because they cannot afford to switch to diesel, which is sold for N733 per liter.” he stated.
The Nigerian Gas and Marketing Company (NGMC), the gas-marketing subsidiary of NNPC, is charged with the duty of marketing and distribution of natural gas to major industrial users and utility companies in Nigeria and the West Africa sub-region.
When contacted, one of the officials of NGMC, who spoke to SlyeNews through a customer care line said, “We have been supplying gas. We don’t have any issues at all and we have not received any complain”
Chief Executive Officer · Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf said such development is not good for the manufacturing industries because the alternative such as diesel is very costly and it will further affect production costs.
“It is not good at this point in time. The industries already have a number of factors to grapple with, such as the inflation, exchange rate, and interest rate, among others. For gas supply to be interrupted at this moment is double tragedy for them. It will not allow them to produce optimally and it would not allow them to create more employment nor even allow them to keep the existing labour,” he said.
He urged the gas-marketing firm (NGMC) to fix whatever problem they have with their system so that the manufacturing firms can resume optimal production.
