The Nigerian Gas Association (NGA) has sought for special foreign exchange, forex, an intervention that will create new opportunities in the midstream sector of the oil industry.
The association argued that Gas investments and loans are largely denominated in US dollars and must be repaid in US dollars.
President of the NGA, Dada Thomas, who made the appeal regretted that CBN in 2015 forced gas suppliers, whose contracts were denominated in US dollars, to be paid in Naira at the official exchange rate without making it possible for them to access US dollars at the official rates to repay their loans thereby subjecting the gas sector to unacceptable currency investment/income mismatch and FOREX exposure
Dada stated that the sector will be motivated if gas producers and suppliers are included in the CBN, special allocation of 60 percent forex to the real sector.
He commended the CBN for the recent inclusion of power companies along with Manufacturers Association of Nigeria (MAN) in the list of those to be granted access to the 60 percent official forex window, but reminded the Bank that gas producers, suppliers, and transporters are the most critical element of the gas-power value chain as they are the foundation for the survival of the power and manufacturing sectors.
“Today, this, along with the illiquidity of the entire gas-to-power sector is the biggest threat to future investment in the domestic gas sector. Foreign and local investors have expressed their unwillingness to invest in the gas sector due to the fact that they can’t get their money back or out”, Thomas added.