Power Firms, Gas Producers at Loggerheads Over Dollar-Denominated Pricing

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The denomination of the price of gas sold to electricity generation companies in United States dollars is sending ripples across the entire value chain of the Nigerian electricity supply industry, The Punch reports.

The President, Nigerian Gas Association, Mr. Dada Thomas, said gas contracts should be denominated in dollars because their plants were executed in the same currency, adding that the nation could be plunged into darkness if the forex risk remained unresolved amid a debt of over $500m owed gas producers by the power sector. According to him, gas producers are being paid at N305/dollar and then they have to go and look for dollars at N365.

The Executive Secretary, Association of Power Generation Companies, Dr. Joy Ogaji, said the Gencos would like the price of gas being sold to them to be denominated in naira. She said, “Why should we pay for gas in dollars? Don’t you see the challenges of foreign exchange? You have to go to the black market to be able to change naira to dollars before you can buy gas.”

The Chief Executive Officer, Association of Nigerian Electricity Distributors, an umbrella body for the Discos, Mr. Azu Obiaya, said the Discos have always agreed with the Gencos’ position that the government needs to give consideration to pricing gas in naira because it will make the market more aligned and minimise the impact of price increase on the consumers at the retail end.

Source: Energy Mix

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