N110bn Debt Cripples Gas Producers


Mr Dada Thomas

The President of Nigerian Gas Association (NGA), Mr Dada Thomas 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.

Thomas, who is also the Managing Director, Frontier Oil Limited, spoke to newsmen 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 generating companies (GenCos) in Nigeria operating thermal plants depend on gas.

His words, “Every session (in this conference) has talked about the liquidity in the power sector and that liquidity is a virtual 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.

He added, “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 percent of the domestic gas consumed in Nigeria is vented to the power plants that are still in the possession of the Federal Government despite their privatisation.

He said, “Also, 80 percent 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.”

Thomas expressed optimism that on the 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 find gas on credit to the private investors, adding that dealing with government brings disruptions as credit denial would be interpreted as economic sabotage

He further 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 supplies. But with the government, it is a different ball game; if there are disruptions, they will accuse you of economic sabotage while they owe 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 are 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 subsidising your business?”

  • The Nation


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