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FG to release new gas pricing template May 29

FG to release new gas pricing template May 29

The Federal Government will release a new gas pricing template before May 29, to address what it describes as ‘unreasonable tariffs’ imposed by gas distributors on natural gas used by commercial consumers in the manufacturing sector.

The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, during an interactive session on National Gas Policy and Regulation on Tuesday, said $7.45 per standard cubic feet of gas paid by manufacturers was too high, especially as they did not operate in the upstream sector of the economy where there was sector-based pricing.

The minister, who was speaking through his Special Technical Assistant on Fiscal and Regulation, Dr. Timothy Okon, said there was no 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.

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.

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

He advised the Manufacturers Association of Nigeria to prepare constructive advocacy ahead of the new policy.

The Chairman, Gas Users Group, MAN, Dr Michael Adebayo, recalled that the gas pricing controversy started in 2008 when one of the franchisers increased gas price from N21.05 per SCF to N67.63 on the basis that the company was benchmarking its price with the Petroleum Products Price Regulation and Monitoring Agency’s template for fixing petroleum products.

Over the years, according to him, the companies kept increasing the prices to an unbearable level.

In addition, he said the benchmarking of the price of gas to the United States dollars had made the process very volatile and was responsible for the current increase in the prices of gas.

“It is instructive that while the average price of gas globally is $2.5 per SCF, in Nigeria, it is $7.54 per SCF. Nigerian manufacturers cannot compete with such pricing,” he said.

In a related development, the Nigerian National Petroleum Corporation has disclosed that it was adding two billion litres of Premium Motor Spirit, popularly called petrol, to its stock every month in order to forestall any form of fuel scarcity in Nigeria.

NNPC’s Group Managing Director, Maikanti Baru, disclosed this while receiving an award from the Road Transport Employers Association of Nigeria during the National Executive Council Meeting of RTEAN in Abuja on Tuesday.

Baru, who was represented by the Managing Director, Petroleum Products Marketing Company, Umar Ajiya, stated that to sustain the present supply of petrol across the country, the NNPC was adding additional two billion litres of PMS to its stock every month with effect from April 2019.

He said all products were available and were at the government approved prices, emphasising that the price of petrol remained N145.per litre, while calling on RTEAN not to allow its members to be shortchanged, as well as to report any marketer who contravened the law to the Department of Petroleum Resources.

Source:Nigerian American Chamber

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