FG set to release new gas policy to lower prices for manufacturing sector

The manufacturing sector may begin to enjoy lower prices for gas as the Federal Government is set to release a new gas pricing template before May 29.

The new policy is expected to review what government has described as ‘unreasonable tariffs’ imposed by gas distributors on natural gas used by commercial consumers in the manufacturing sector.

This was disclosed by the Minister of State for Petroleum Resources, Dr Ibe Kachikwu, during an interactive session on National Gas Policy and Regulation on Tuesday.

According to the minister, the $7.45 per standard cubic feet of gas paid by manufacturers was too high, since they did not operate in the upstream sector of the economy where there was sector-based pricing.

Represented by his Special Technical Assistant on Fiscal and Regulation, Dr Timothy Okon, Kachikwu said there was distinction in the pipelines that supplied gas to the manufacturing sector, adding that they were smaller and delivered lower pressure, and so did not call for a high tariff.

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According to him, the government in 2008 had specified that the price of gas should be market derived, and based on the Export Parity Price, which is the destination price less transportation, adding that because of lack of enforcement of that policy, people fixed all kinds of prices for gas.

He however said the government was making some changes to the 2008 regulation.

He said: “Government is relying on market-derived pricing mechanism which matches the international pricing. This is the law that people are overlooking and manufacturing figures from nowhere.

“If the international price of gas is $5, why should the end user in Nigeria pay $8?”

“We are unable to see how the current structure conforms to the rules that have been set.

“The proposed pricing will be done before May 29.”

He however called on the Manufacturers Association of Nigeria, MAN, to prepare constructive advocacy ahead of the new policy.

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