June 19, 2024

Price of 12.5kg cooking gas soar over 100% in 1yr hits N8,500 in Lagos


Yinka Oladele

The price of Liquefied Petroleum Gas, LPG, or cooking gas, has continued to skyrocket in recent times with the 12.5 kilogramme, kg, now selling for as much as N8,500 in some parts of Lagos and environs despite Federal Government’s plan to make the product appealing to the common man.

Investigation by EnergyDay show that the 12.5kg which sold for N4,000 in September 2020 has risen by 100% to N8,000 by the end of September this year and has even increased further in the last two weeks to N8,000 in most major cities across the country including Lagos and Abuja.

The rise cost of the commodity seems to be a negation of the objective of Federal Government’s National Gas Expansion Programme, NGEP, scheme.

Recall that the NGEP was launched earlier this year to drive increased utilisation of gas as better alternative fuel for homes, industries and automobiles.

Observers and analysts, have attributed the skyrocketing price of the product in recent times to various reasons including shortage in supply following a drop in importation as the government imposed an import tax on cargoes arriving the country.

Others equally point to the declining value of the Naira when compared to the Dollar. This is further buttress by finding that the landing cost of the product has continued to skyrocket due to absence of foreign exchange as importers claim the can’t source for the Dollar at the official market rate.

Meanwhile, available data show put the volume of domestic consumption of LPG at 1.2 million metric tonnes, MT, out of which the Nigeria LNG Limited, NLNG, supplies about 450,000MT while independent marketers supply 750,000MT through imports.

But in the midst of the soaring price Nigerians have continued to witnessed the usual blame game and counter accusations among operators while the consumers bear the pain.

For instance, gas marketers and the NLNG have been passing the buck on who or what is responsible for rising prices recently.

On the other hand, the NLNG claimed that marketers lacked enough infrastructure to take up its cooking gas supply, a claim also refuted by the marketers.

The Marketing Manager, NLNG, Austin Ogbogbo, had said: “NLNG has grown its capacity from 50,000 metric tonnes per annum to 450,000 metric tonnes per annum of LPG in the past 14 years.

“Nigeria needs 1.2 million metric tonnes per annum, but even the 450,000 we produce cannot be absorbed by the market’s current infrastructure.”

When asked if the NLNG’s position was true, the National Chairman, Liquefied Petroleum Gas Retailers Association of Nigeria, Michael Umudu, replied in the negative.

He said: “Marketers have the capacity to absorb the 1.2 million metric tonnes annually and this figure will continue to increase.

“Marketers have the capacity; rather, the challenges of the NLNG have to do with logistics. Many depots use to be empty for months; so, why should they say marketers don’t have capacity?”

According to Umudu, storage of cooking gas does not end in the midstream facilities, with inland facilities such as gas plants and retail outlets having more storage capacities.

“This is how it works: LPG is discharged in a depot, and LPG trucks are ready to load products to plants. From the plants, retailers refill their cylinders and store in their shops while end-users buy.

“This means that a depot of 5,000MT storage capacity can do a turnover of 15,000MT a month or even more. So, looking at the estimated 1.2 million MT yearly demand, it shows that if NLNG supplies only 100,000MT a month, then the 1.2 million MT target is met,” he said.

He added: “If the depot of 5,000MT storage capacity can do 15,000MT a month, then calculating other depots with even much more capacities and multiplying by three for a month turnover, you will realise that these depots would do up to 150,000MT monthly.

“And going by the 1.2 million MT annual consumption demand, we only consume about 100,000MT a month. So why should NLNG say there is no enough storage?”

The gas retailers’ chairman noted that the NLNG or any other supplier did not need to supply the annual need at once, adding that this was why he called for the improvement of logistics by the LPG producer.

“With respect to logistics, if they (NLNG) can adapt to compatible vessels and engage enough of the vessels, then more than 1.2 million MT annual estimate would be conveniently met,” Umudu added.

Reacting to the position of the marketers, the spokesperson of the NLNG, Eyono Fatayi-Williams, said the gas firm could only give 450,000MT at the moment to the domestic market.

She also observed that there were challenges with logistics, such as the delay of vessels at the Lagos port, but stressed that the NLNG was doing its best to deliver its part in the supply of cooking gas.

She explained that in 2007, Nigeria could only produce 50,000MT of LPG and that the NLNG was asked to intervene, stressing that the gas firm was primarily set up for export.

“Between 2007 and now, because we have guaranteed supply, the market has grown. Today, Nigeria can take over one million tonnes of cooking gas,” Fatayi-William said.

She added: “The maximum production we have of cooking gas is 450,000 metric tonnes annually and the market did over a million metric tonnes last year.

“Also, when we talk about logistics, the maximum amount we can now give, which is the maximum production volume, is less than what the entire country needs. We are not the only producer of LPG but we can only give 450,000MT.”

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