April 16, 2024

FG identifies high switching costs, poor awareness as factors for slow penetration of cooking gas in Nigeria 

Oredola Adeola
The Nigerian Government has revealed that high switching costs associated with the acquisition of Liquified Petroleum Gas(LPG) cylinders and stoves, and poor awareness of the associated benefits of cooking gas handling, are some of the basis for preference for the use of Kerosene firewood and charcoal for cooking in Nigeria.

Dr Adeyemi Dipeolu, Special Adviser to the President on Economic Matters in the Office of the Vice President made this known on Wednesday at the India-Nigeria Liquefied Petroleum Gas (LPG) Summit hosted by Nigerian National Petroleum Company Limited (NNPC Ltd.) with the support of the Office of the Vice President and World LPG Association (WLPGA).Abuja, 2022.

According to Dr. Dipeolu, despite being the ninth largest proven natural gas reserves in the world, and also the second largest producer of LPG in Africa after Algeria, LPG adoption in the Nigerian market is still very low with per capita consumption at about 1.8 kg, which is below the West African average.

He said, “The household energy mix in Nigeria is about five per cent LPG, 65 per cent biomass and 30 per cent kerosene.

“The preference for the use of other sources is largely due to high switching costs associated with the acquisition of cylinders and LPG stoves, lack of awareness of associated benefits and safe LPG handling across consumer basis.

“There is also the high cost of LPG in comparison with alternative fuels, insufficient and inappropriate cylinders in circulation and inadequate infrastructure, especially trucks, roads, rail pipelines and plants,” he said.

He further noted that the predominant use of biomass for household cooking resulted in deforestation and ambient air pollution, which also could lead to death due to stroke, heart disease, lung cancer and chronic respiratory diseases.

The SA to the President on Economic Matters also noted that only eight per cent of about five million tonnes of Liquefied Natural Gas (LNG) produced annually in Nigeria, is being utilised domestically, adding that the bulk is being exported.

According to him, domestic LPG production stands at about 45 per cent of annual consumption, with Nigerian Liquefied Natural Gas Limited (NLNG) supplying 450,000 metric tonnes per annum while 55 per cent is imported.

Dipeolu however noted that policies and incentives are needed to attract more investors into the Nigerian LPG market.

He noted that these incentives would make cleaner fuel available, accessible and affordable, not only for household cooking, but also in CNG, captive power generation, heating and cooling as well as agriculture and industry.

He further suggested that the recently enacted PIA specifically provides enablers for robust midstream and downstream gas development through promotion of policies, incentives and waivers to stimulate investments.

Dipeolu added that removal of VAT on domestic LPG, presidential waiver on duty imported LPG equipment, tax holiday on new investment on gas and approval of eight new LPG terminals and storage facilities to add 150,000 metric tonnes gas capacity, are some of the incentives for investors.

Speaking on the topic of the summit, `Energising the Future: Leveraging the Indian Experience to Achieve Nigerian National LPG Aspiration’,  the Presidential aide revealed that Nigeria would learn from India’s experience with the Pradhan Mantri Ujjwala Yojana (PMUY) scheme implemented by the Indian Government in May 2016 such that LPG penetration in that country increased from 62 percent to 100 percent currently.

Dipeolu said the cooperation should dwell on policy structures; health, safety, and environmental methods and standards, ICT, infrastructure management techniques, stakeholder engagement, and innovative programmes to incentivise Nigerian LPG market growth.