N110b Debt Cripples Gas Producers

gas producers
  • N110b Debt Cripples Gas Producers

The President, Nigerian Gas Association (NGA), Dada Thomas yesterday lamented that players in the gas industry are running out of cash as a result of the N110 billion debt customers are owing gas producers.

Dada Thomas

                          Dada Thomas

Thomas, who is also the Managing Director, Frontier Oil Limited, spoke to reporters at the ongoing NGA conference in Abuja.

He said the intervention of the Central Bank of Nigeria (CBN) to gas producers was still negligible because all the electricity generation companies (GenCos) in the country operating thermal plants depend on gas.

He said: “ Every session (in this conference) has talked about the liquidity in the power sector and that liquidity is virtually terminal. By terminal, it means the patient is already collapsing and if pushed a little bit, that’s its end. The problem in that sector needs to be fixed. Gas producers are owed more than N110 billion right now.

“The CBN intervention was just a drop in the ocean. So we have a serious problem. It is important to state that all GenCos who run thermal plants in Nigeria get their gas from gas producers. You can’t run a thermal power plant without gas.”

He added that 80 per cent of the domestic gas consumed in the country is vended to the power plants that are still in the possession of the Federal Government despite their privatisation .

“Also, 80 per cent of the domestic gas in this country today is sold to power plants. But unfortunately these power plants are still in the possession of government, despite the so called privatisation which has not been properly concluded. We want the privatisation of the power sector to be fully concluded,” he said.

He expressed optimism that on conclusion of privatisation, all the plants will become the entities of the investors who will run them as proper businesses.

According to him, the producers would not vend gas on credit to the private investors, adding that dealing with government brings disruptions as credit denial would be interpreted as economic sabotage

He said: “When it is fully concluded, then every power plant will be in the hand of a private investor. That is when we can talk properly as business entities. If you are a private investor, I will not give you my gas on credit. You must pay me to get supply. But with government, it is a different ball game; if there are disruptions, they will accuse you of economic sabotage while they are owing you all kinds of money.

“If you are a private investor and you buy this power plant today and I sold gas to you for one month and I say where is my money and you keep telling me stories, after two months, I’ll have no choice but to shut you off. You are a profit making organisation and so why should l be subsidizsing your business?”

About the Author

Samed Olukoya
Samed Olukoya is the CEO/Founder of investorsking.com, a digital business media, with over 10 years' experience as a foreign exchange research analyst and trader. A graduate of University of East London, U.K. and a vivid financial markets analyst.

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