Gas operators urge Nigeria to end subsidy to NEPA

Nov 07, 2004 01:00 AM

Gas producers and distributors have called on the Federal Government to remove the special gas prices fixed for state-owned industries if the objectives of attracting investment into the sector and raising the level of consumption of the commodity were to be realised.
In a communique issued at the end of the 4th International Gas Conference and Exhibition organised by the Nigerian Gas Association (NGA), operators said the Federal Government should allow the enterprises notably the National Electric Power Authority (NEPA) engaged in commercial negotiations with gas producers.

"We are conscious of the need to increase the participation of Nigeria in the gas industry and indeed make the Nigerian economy a diversified one with gas as a major component using the right technology and the right people," stated the communique.
It therefore called on stakeholders and operators to among other measures:
-- Provide local market for the products of the sector.
-- Provide funding assistance through the financial institutions.
-- Participate in more gas gathering and utilization projects.
-- Develop measures and schemes to ensure high level of accountability, human capacity building and development of world class centres of excellence in Nigeria.

At a consumption rate of about 300 mm cfpd, NEPA remained the biggest consumer of gas in the domestic market. But it is currently buys gas from the Nigerian Gas Company (NGC) at a subsidised rate of N 12 per thousand cf, compared to the commercial price of N 422 per thousand cf. Government said it was spending about $ 90 mm yearly to subsidise gas consumption in the power sector.
The communique said the conference and exhibition was designed to serve as a thinking tank from which expert thoughts and ideas could flow to shape Nigeria's Gas industry.

"The conference was therefore part of the efforts of the NGA in assisting government to achieve its aspirations of eliminating gas flaring as well as capturing the economic value of gas through the development of export and domestic gas sector."
It further called on the Federal Government to ensure adequate pricing in the domestic market, encourage the participation of local investors in the gas sector by creating a level playing field in the downstream sector; and to assume its responsibility in the achievement of local content in the gas sector through the provision of sound infrastructure, favourable fiscal and monetary policies, stable and educated workforce of international standards.

Also the government was enjoined to encourage greater participation in the financing of gas projects by Nigerian financial institutions by reducing or eliminating transaction costs, especially loan stamp duty; facilitate the implementation of the National Gas Policy, and the passage of relevant portions into law; and to ensure that the National Gas Policy is reviewed and updated periodically to ensure currency of objectives.

Source: This Day
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