The rising cost of Liquid Petroleum Gas (LPG), popularly known as cooking gas, may continue amidst continuous upward movement in dollar price, LEADERSHIP learnt.
Hence, it seems The alternative cooking fuel, such as, firewood and charcoal may be the only option available to millions of households in Nigeria. Investigations by LEADERSHIP showed that cooking gas prices have recorded a new high selling as much as N1,100 per kilogramme.
At a retail outlet operated by the Nigerian National Petroleum Company (NNPC) Limited, in Maryland, Lagos, Clement Ewullum showed our Correspondent a receipt in which he paid N13,750 for 12.5 kilograms. The receipt bore the date February 12, 2024.
Further checks showed that the price of cooking gas increased significantly during the week from N12,000 to N14,000 given the ongoing uncertainty surrounding the currency rate.
Also, signs are rife that the price may rise much higher as Nigerians have expressed their displeasure with the continuous rise in the cost of the product and other commodities.
In some other outlets operated by Independent Petroleum Marketers, the price of a 12.5 kilogramme of LPG, hiked from N12,000 to N14,000, which is a little margin above what NNPC is selling.
However, there are indications that the cost may rise to N16,000 due to ongoing concerns about the exchange rate. Industry stakeholders have attributed the potential hike to the current exchange rate, which hovers around $1 for N1,500 in the unofficial market.
Former Programme manager, National LPG Expansion Implementation Plan (NLEIP), in the office of the vice president, Dayo Adesina, told our Correspondent during a telephone conversation that despite penetration of LPG which was witnessed in 2023, there is upward movement of prices because of fluctuations in exchange rate.
Adesina said the market is confronted with a myriad of challenges from off takers in the gas industry, to shrinking processing plants and acute shortage of infrastructure.
The market appears huge and gas reserves very hefty but LPG penetration and pricing are challenged.
He said, there are genuine initiatives by the federal government to promote LPG usage but demand went from 1.4 million tons in 2022 down to 1.2 million in 2023 which is about 200,000 short of demand but yet price kept rising.
The National Bureau of Statistics (NBS) revealed that Nigeria’s average price for refiling a 5kg cooking gas cylinder hit N4,828.18 in November 2023. This represented a 5.82 per cent increase compared to the N4,562.51 average price recorded in October 2023. While on a year-on-year basis, cooking gas prices increased by 6.13 per cent from N4,549.14 in November 2022.
According to Adesina, Nigeria is supposed to be a 2.5 million tons market if adequate penetration strategy is adopted.
He however, explained that about 60 per cent of domestic consumption is imported, prices will continue to fluctuate so long as foreign exchange is unstable.
According to him, the Nigeria Liquified Natural Gas (NLNG) Limited, through improved gas supply in the domestic market, is helping to address the price hike.
Adesina admitted that the NLNG has been making defining contributions to the domestic LPG market, spurring the steady growth of the nation’s DLPG market volume from less than 50,000 metric tonnes of imported LPG in 2007 to over 1.3 million metric tons of both domestic and imported LPG today.
Our Correspondent reports that the NLNG currently delivers over 450,000 metric tonnes per annum of Butane, the main product in cooking gas and has embarked on domestic propane supply to further grow the market.
The company has committed its entire Butane and Propane production to the domestic market from 2023 and despite feed gas challenges, continues to supply LPG to the domestic market, accounting for approximately 40 per cent of the total market volume.
Since the beginning of 2023, NLNG has delivered over 380,000 metric tonnes of LPG using the Company’s dedicated LPG vessel and has remained committed to delivering domestic LPG to locations as close to the market as possible by diversifying delivery points starting with Lagos in 2023, fostering competition among terminal owners and ultimately reducing consumer supply chain costs.
Efforts are ongoing to reach terminals in Warri and Calabar as soon as the challenges limiting safe delivery of volumes to these other locations are cleared.
The domestic LPG market, like any other, is subject to dynamic market forces and various external factors.
Such factors as changes in exchange rates, and escalating price benchmarks mirroring crude oil prices, and the Panama Canal drought-induced vessel scarcity impacting transport costs especially for imported LPG, have had significant effect on energy prices in the recent times and could undoubtedly be some of the reasons for recent price hikes witnessed in the domestic market.
The NLNG maintains an unwavering commitment to ensuring the reliable supply of its LPG production to the domestic market at prices that are reflective of the market. The company is collaborating relevant industry stakeholders to achieve this objective and will remain focused on achieving its mission through this avenue among others.
Consumers, however, are lamenting the hike in gas complaining that cooking gas was becoming a product of the elites and out of reach for the common man.
Mrs. Lovelyn Emesiobi, who runs a fast food mobile business, complained that because of the high cost of gas she has resorted to the use of charcoal.
She said, with N2,000 worth of charcoal she can run her business and home cooking for almost 2 weeksWith.
Chuka Uzoma runs a beer parlour and prepares fish and other delicacies, has also resorted to use of charcoal as cooking gas is getting out of reach of the average Nigerian. It was reported that a few days ago, 20 metric tonnes of LPG was sold for N16 million, but at the moment, it sells for N21 million.
Industry operators have blamed the fast-eroding value of the naira and the exchange rate fluctuation for the sharp rise in the cost, while the operating cost of business keeps rising with the exchange rate.
Just recently, the minister of petroleum resources, Ekperikpo Ekpo, met with stakeholders to discuss the rising cost of cooking gas.
The minister raised concerns on the need to reduce the cost of cooking gas and prioritise its adoption. He said: “We will prioritise the domestication and penetration of LPG and implement measures to significantly reduce the price of cooking gas for our people, ensuring it becomes more accessible, available and affordable for our citizens.”
In an interview with the managing director and chief executive officer of Pinnacle Oil and Gas, Robert Dickerman, he said, because the NLNG produces 40 per cent and the rest is imported, as such there is nothing sinister going on.
Dickerman said: “There’s nobody planning it. And they will go up and they will go down. That’s the beautiful thing about global market prices. They don’t just go up. When there are efficiencies, high prices will create additional supply, which will then reduce prices. It’s a self-balancing system.”
