Govt agencies trade blame over hike in price of cooking gas, oil cartel fingered
Emerging facts have pointed to reasons for the scarcity and skyrocketing hike in price of Liquefied Petroleum Gas( LPG) which is also referred to as cooking gas.
EnergyDay gathered that a slew of factors which looks like a conspiratorial synergy between some storage facilities’ owners among the petroleum marketing companies and the Nigeria Ports Authority, (NPA) may have been responsible for the on going scarcity and subsequent jerk up in price of Liquefied Petroleum Gas (LPG) .
According to EnergyDay’s findings, some elements among the oil marketing companies with affiliation to the Major Oil Marketers Association of Nigeria (MOMAN), are alleged to have constituted themselves into a cartel that has made them powerful enough to engage in activities that are distorting the LPG market.
It is worthy of note that close to twelve months, there has been a steady rise in the price of LPG , with current refilling price rising by more than 100 per cent, largely because of the scarcity of the product, said to have been caused by scarcity of foreign exchange for importation, naira devaluation and rising inflation.
This medium’s extensive investigations further revealed that the current scarcity and the rooftop price of the product can not be divorced from among other variables, the arbitrary charges by government agencies, and the newly-added 7.5 per cent Valued Added Tax (VAT) to the basket of marketers’ charges.
According to National Bureau of Statistics, the country presently consumes about 1.2mt of LPG, with Nigeria LNG currently supplying 450,000mt to the market, while marketers are left to import the remaining 750,000mt.
When EnergyDay went round Lagos metropolis to ascertain current situation with respect to price of the product in the market, it was discovered that a 6-kilogram LPG refilling unit now goes for between N3,400 and N4000, while that of 12.5kg refilling unit costs between N6,750 to N8000, depending on the part of the country where the purchase is made.
Further findings have revealed that aside the variables affecting supply and price mentioned above, the racketeering cartel, said to have been formed by the oil marketing companies, has resulted in the inability of the “lastmile” LPG marketers to get the product from the terminal owners.
This is said to be a prime factor for the current crisis, according to findings.
A dependable industry insider who is in the know of what is going on told EnergyDay that members of MOMAN, who are in the cartel, have now resorted to rejecting supply from the Nigeria LNG Limited, using insufficient storage capacity as pretext.
According to the source, those in the cartel prefer white petroleum products like kerosene, diesel and petrol to LPG, the source added that when they manage to receive supply from the NLNG, they sell to customers at the same price they sell imported products.
In spite of conservative estimate of 206.53 trillion standard cubic feet of natural gas deposits in Nigeria as of June 2021, the price of cooking gas has surged higher beyond the reach of Nigerians, with five increases recorded in three months, according to findings.
Some of the gas users who spoke to EnergyDay during a market survey in Lagos, said the situation had forced scores of poor Nigerians to resort to using charcoal-fuelled stoves to cook.
Records of gas price tags indicated that the marketers started to jerk up price of the product from April this year, rising from around N3, 600/12.5kg cylinder to N4, 200. By May, gas filling plants sold 12.5kg for N4, 700 while it reached N5, 000 in June and N5, 700 in early July.
It was learnt that those buying in lower volumes like 3kg, 5kg, 8kg and 10kg, paid over 50 per cent more than they did in March.
Recall that the Petroleum Products Pricing Regulatory Agency (PPPRA) recently reported that the volume of LPG supplied in August fell by 20.5% to 85,264.803 metric tons (MT) compared to 107,224.584MT supplied in July and 102,787.234MT in June.
Abdulkadir Saidu, the Executive Secretary of PPPRA, in a recent statement said of the 85,264MT volume, about 38,040.457MT was sourced locally by Ever Oil, Stockgap, NIPCO, 11 Plc., Greenville Natural Gas, PNG Gas Ltd, NPDC and Ashtavinayak Hydrocarbon Ltd. in August.
According to him, a large chunk of 47,224.346MT was imported by NIPCO, Matrix, Algasco, Techno Oil, Prudent, A. A Rano, and Stockgap. The imports were more from the USA; Algeria and Equatorial Guinea in Africa.
Dr John Adoki, chief research officer at Statistica told EnergyDay that ” in the current crisis, the unpatriotic activities of powerful cartel may not be ruled out, I will not mention names, but it is the responsibility of a serious government to investigate what is actually happening. It is only in Nigeria that government functionaries and the various agencies of the same government always give conflicting Statistics on the same phenomenon.
Femi Asiwaju of the Consumers Right Watch, an advocacy watchdog that fights for the rights of Nigerian consumers told EnergyDay that “absence of vision and goals on the part of government is always responsible for the various dysfunctions in the system, which always gives room for sabotage, the current hike in the price of liquefied natural gas is not divorced from this systemic dysfunction.
Efforts to speak with the Executive Secretary of MOMA, Mr. Clement Isong was not successful as his line was switched off, and he did not reply text message sent to him.
NPA officer who craved anonymity told this medium that there was no truth in the allegation that NPA had delayed NLNG’S LPG vessel at the Apapa Port, which is partly alleged to have contributed to the reason the Nigerian market was not able to take all of the 450,000mt.
Recall that recently NLNG alleged that NPA had been delaying its vessels at the ports.
It would be recalled that the Marketing Manager, NLNG, Mr. Austin Ogbogbo, in a recent press conference told journalists that because of certain logistics, only about 375,000mt of the company’s dedicated 450,000mt LPG supply was being taken by the domestic market.
Part of the hindering logistics according to Ogbogbo, had to do with delay of the company’s LPG vessel at the Apapa port, preference of white products for LPG by the terminal owners, and insufficient coastal storage facilities.
He said if those logistical challenges were solved, the company would supply 100 per cent of its LPG production to the domestic market.
“We could go up go 100 per cent if the coastal storage is available. Sometimes, you want to supply, LPG takes the backstage. They prefer white products in the coastal storage, or if it’s not white products, your vessel might be there for days, accumulating demurrage.
“Immediately that is cleared and we are sure we can come in and supply, we will push that in, and hopefully, we would ramp up to the 100 per cent,” Ogbogbo said.
Meanwhile, some gas users have heaped enormous blame on the federal government for its inability to control the price in the open market.
Dora Boroh, a resident of Lagos said the rising cost of gas was worrisome, saying the development has made many revert back to the use of coal and firewood because kerosene was also expensive.
“With the way things are going, the cost of gas may rise to N1, 000 per kilogram by end of the year,” she predicted.
For Bosede Anjorin, a petty trader and a resident of Alakuko, a Lagos surburbs she and her many neighbours had resorted to the use of charcoal pots because they could no longer afford gas.
Deola Fatumise , a vegetable seller at Ijaye , Ojokoro said she abandoned his gas cooker for a charcoal stove. “Many of us can’t buy cooking gas anymore; government should do something about it. The price keeps increasing every day.’’