The Federal Government has reduced the price of industry power gas from $2.50 to $2.18 with immediate effect, in line with the President Muhammadu Buhari push for industrialization, particularly in the Northern part of the country, even as the administration said the Ajaokuta-Kaduna-Kano, AKK Gas Pipeline Project will create 1 million jobs.
Analysts insist that by agreeing to a price slash the administration, has effectively bowed to pressure from the organized Labour in the country to reduce the price of industrial gas.
Last month, the Executive Director, Research and Advocacy, Association of Nigerian Electricity Distributors, ANED, Sunday Oduntan, called on government to bring down the price of gas in the interest of the sustainability of the power sector.
Oduntan stated, “Most of Nigeria’s power generating plants are thermal plants. They use gas as their fuel and as long as the price of gas is high, the cost of generation and the eventual tariff to the end user will also be high.
“At present, the energy generation mix is around 80% thermal and 20% hydro. More so, the cost of gas is also affected by fluctuations in Foreign Exchange (Forex).
“So while the cost of gas and generation will rise due to forex fluctuations, the tariff is fixed in Naira and may not account for this difference. Especially because of the absence of a commitment to adhering to periodic tariff reviews.”
Speaking at the 2021 Gas Sector Stakeholders (Ajaokuta-Kaduna-Kano, AKK Gas Pipeline Project) Forum held in Kano, the Minister of State for Petroleum, Timipre Sylva, who represented President Muhammadu Buhari said that the government has already agreed to sell Industry Power Gas at the approved price of $2.18 instead of $2.50. He said the decision has been communicated to the relevant stakeholders for compliance.
The minister stated that the change in price was to allow quick industrial revolution in the country.
He said, “Following the successful negotiation between the Federal Government and the organized labour unions and the detailed review of the gas pricing framework in Nigeria, the price of gas to power has been reduced from $2.50 to $2.18 with immediate effect.
“The outcome of the negotiation and reviews have been communicated to relevant stakeholders.’’
According to him, the completion of the project would help in revitalizing dead industries as well as create more jobs opportunities in states such as Kano, Kaduna and Nasarawa states.
He said, “The project is the focus of facilitating increased gas penetration in the Northern part of the country, especially the AKK pipeline corridor of FCT, Kano, Kaduna, Kogi, Niger, Nassarawa and other neighbouring states.
“Therefore, the forum is geared towards sensitizing the entire northern parts of Nigeria of the upcoming opportunities to bring both new and hitherto moribund companies back to life.
“Kano State alone is dotted with several industrial parks. These and others in other states justify the need to optimize value creation from these industries.
“Experts estimate that it will take at least two to three years to rehabilitate and position these industries for optimal performance. Thus, today’s collaboration with all stakeholders is geared towards kick-starting the required activities that will guarantee full usage of the delivered gas through the AKK pipeline when completed.
“Today’s event reinforces our commitment to realizing the inherent potentials of Gas usage as the National Catalyst for Achieving Economic Diversification from Crude oil and transition fuel from fossil fuels of today to the renewable energy of tomorrow.
“It is this commitment that informed our support and commission of two gas-powered plants, vessel pipeline operated in Kano State in December 2020 in achieving the uninterrupted delivery of over 30 megawatts of power supply to the industrial hubs.
“Our successful collaboration and the completion of the AKK in 2023 will significantly enhance Mr President’s vision and current drive for increase domestic gas utilization as the mainstay for national industrialization, increase foreign investment, government revenue growth and ultimately provide more job opportunities for Nigerians.
On his part, the Group Managing Director of Nigeria National Petroleum Corporation, NNPC, Mele Kolo Kyari, said when the project is completed it will create 1 million jobs.
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