July 21, 2024

LPG price rise may scuttle Buhari’s gas campaign

LPG price rise may scuttle Buhari’s gas campaign

Yinka Oladele

President Mohammadu Buhari’s efforts at promoting more use of gas in Nigeria may run into a hitch as price of Liquefied Petroleum Gas also known as cooking gas has upped to a record high across the country, forcing some consumers to go in search of alternatives.

Investigations by EnergyDay showed that a 12.5kg cylinder which was sold in Lagos for at least N4, 500 in June, is now being sold at between N5500-N6000 at different parts of the state.

Partly responsible for this surge is the recent devaluation of the naira, calculation puts per kilogramme of the product at N500.

Reacting to the hike, Ambrose Omokordion Chief Research Officer at Investa told EnergyDay that ” there is a compelling case of economic law at play as in short supply trumping demand, and don’t forget the recent devaluation of the naira.

“Now the price of cooking gas has risen by more than 60 per cent since early December last year on the back of the recent devaluation of the naira and lingering inadequate domestic supply of the fuel. Going forward what we need is complete deregulation, and not knee-jerk response.

EnergyDay findings revealed that cooking gas prices maintained an upward trend in recent months, more Nigerians, especially in the rural and semi-urban areas, have been discouraged from using the fuel for cooking.

It was also learnt that some Nigerians who do not have prepaid electric meters are now increasingly using electric cookers in a bid to reduce their cooking gas usage.

A gas plant in Lagos refilled a 12.5kg cylinder for LPG for N5,200 on July 17, up from N4,400 on June 17 and N3,200 in November/December 2020.

It was learnt that several retailers in Lagos fixed the price for refilling a 12.5kg cylinder at between N5,200 and N5,600, up from N4,000 and N4,500 in December. A retailer at Ogba refilled 3kg and 5kg cylinders for N1,500 and N2,500 respectively, translating to N500 per kg.

The National Chairman of Liquefied Petroleum Gas Retailers Branch of NUPENG, Mr Chika Umudu, in a recent interview attributed the price hike to the country’s high dependence on importation for LPG.

“As the dollar is appreciating against the naira, the price of LPG is increasing,” he said.

He suggested that the Nigerian LNG Limited, which accounts for more than 40 per cent of the LPG supply volumes in the country, should be supplying the domestic market in accordance to the demand, rather than having a fixed quantity per annum.

“People in rural areas and semi-urban areas, who are even the major target of LPG expansion, are beginning to dump their cylinders. It is not a good development.

When this reporter visited some restaurants in Lagos, it was discovered that some canteens and restaurants are now turning to charcoal and firewood because they cannot factor the hike in cooking gas appropriately into their costs.

Dr. Olufemi Omoyele, an economic analyst told this medium that “Government should work out a framework with NLNG to meet up with local demand and equally encourage other multinational companies to supply the domestic market so that we stop talking about importation of LPG.”

A resident of Agbado, Ogun State, Mr Obatomi Ajewole said the increase in the price of cooking gas had affected the quantity of food sold to customers by food vendors.

He said, “I filled my gas cylinder two months ago for N400 per kg. Last Saturday, I paid 500/kg to the man who sold it to me.

Recall that in May, the Central Bank of Nigeria devalued the naira as it adopted the NAFEX exchange rate of N410.25 per dollar as its official exchange rate, raising the naira to as high as 503/$1 at the parallel market.

This unhealthy development is against the backdrop of Buhari’s administration declaration of the year 2020 and beyond a decade of gas in a bid to draw citizens attention to embracing more use of gas.


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