Gas producers in Nigeria are not happy about the rising debts of their clients with respect to making payment for supplied gas, particularly power firms.
According to them, the indebtedness to gas producers in Nigeria is currently over N110bn and about 80 per cent of the debts are owed by electricity generation companies.
The gas producers re-echoed the fears of private investors who invested in the successor electricity companies as they stated that the power sector could collapse if the prevalent situation persisted.
Speaking on the sidelines of the ongoing 10th International Conference and Exhibition of the Nigerian Gas Association, the organisation’s new President and Managing Director, Frontier Oil Limited, Mr. Dada Thomas, said the problem in the power sector had to be fixed as it was affecting gas producers adversely.
He said, “For instance, in this conference, every session has talked about the illiquidity in the power sector and that illiquidity 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 N110bn right now.
“You heard of the CBN intervention, but it was just a drop in the ocean. So, we have a serious problem and that’s nothing but the truth. It is important to state that all Gencos (power generation companies) that run thermal plants in Nigeria get their gas from gas producers. You can’t run a thermal power plant without gas.”
Thomas stated that the major consumers of domestic gas were power plants and wondered why the government had not fully privatised the sector in order to allow industry players to uphold stipulated contractual agreements.
He said, “About 80 per cent of the domestic gas in this country today is sold to power plants. 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.
“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 going. But with the government, it is a different ball game; there are disruptions, for they accuse you of economic sabotage and owe you.”