NMDPRA says domestic supply of cooking gas surpasses importation, as stakeholders propose solutions to price hike

Oredola Adeola

The Nigerian Midstream and Downstream Petroleum Authority (NMDPRA) claimed that the domestic supply of Liquified Petroleum Gas (cooking gas) in Nigeria has surpassed importation, as domestic consumption of the commodity is estimated at 1.419 million metric tonnes (MMT) in 2022.

Ogbugo Ukoha, Executive Director of Distribution Systems, Storage and retailing Infrastructure, NMDPRA made this known in his remark at the 36th Annual General Meetings and conference of the Nigerian Association of LPG Marketers (NALPGAM) in Ibadan, Oyo state on Tuesday.

According to him, the good thing about domestic production of LPG outweighing importation is that it provides the country with energy security.

He revealed that Nigeria has made significant milestones in reducing its dependence on imported Liquified Petroleum Gas (LPG) as efforts are being made to ensure that the domestic supply of the commodity is sustained to ensure that pressure on foreign exchange is reduced, and Naira is strengthened. 

He said, “President Bola Tinubu’s recent withdrawal of subsidy on petrol has resulted in a reflective pricing mechanism across market demand for petroleum products in the country. He added that cooking gas, Premium Motor Spirit (petrol), Automotive Gas Oil (diesel), and other white products are now competing among themselves due to the deregulation of the downstream sector.

“So many measures have been put in place to ensure that domestic consumption for cooking gas, which is estimated at 1.419 mmt in 2022, is sustained to cater for the rising domestic demand. This is part of our commitment to drive down the price of the commodity to ensure that cooking gas is available and affordable in a sustainable manner,” the ED, NMDPRA Distribution Systems, Storage & Retailing Infrastructure said. 

He emphasised that the Authority is doing all that can be done to ensure that the output is guaranteed, and domestic market supply of the commodity is sustained by the NLNG and the Bonny River Terminal (BRT).

Speaking on the reason for the rising price of cooking gas across Nigeria which varies between N900 and N1000 per kilogram in some part of the country, Ukoha emphasised that the demand for cooking gas in Nigeria has increased significantly due to the removal of subsidy on petrol, thereby exerting pressure on the market.

He said, “In the last few months so many people have seen gas as the alternative fuel because it is cheaper and more efficient than petrol and diesel. There is a surge in its uses both as auto fuel, power generation and cooking.

“This interesting energy switch has increased the demand as against the supply of the commodity and therefore there is a need for more investment across the entire value chain (upstream, midstream, and downstream) to drive down the price of the commodity.

“Of course, since demand for cooking gas has risen over time, the price at the retail end ultimately rises because investment in the LPG sector is denominated in the United States Dollars (US$). Even if domestic payment for the supply of the commodity is made in Naira, cooking gas is still benchmarked at the $ value based on the international market.

The NMDPRA has therefore called for intensive investment across the value chain with a view to tapping from the country’s huge reserve of products from the gas field, terminal, and to the retail ends for the end users.

Our focus should be putting in place a policy framework that will therefore increase supply and drive the necessary investment in gas assets and infrastructure. This would at the long run drive down the price to a reasonable level that the Nigerian people can afford.

The Authority ED has therefore restated the commitment of the NMDPRA to work closely with other stakeholders including the gas marketers to upscale their investment in infrastructure to guarantee a regular supply of cooking gas in-country and to address the price hike.

He said “Nigerians have realised that LPG is far cheaper than other white petroleum products. Therefore, the more we drive up the supply it would reflect ultimately on the prices.

“The outlook for the gas market is quite impressive and this is why more investment is needed in this area. Our target at NMDRPA is to ensure that gas is the choice of petroleum product across Nigeria.

“We will continue to encourage LPG marketers to expand their investment to boost the supply of gas in-country to address the price hike. Hopefully some of the price hike and affordability would be addressed so that we can get cheaper and safer forms of hydrocarbon products.

“Everybody seems to be more focused on the gas reserves in Nigeria that have not been fully tapped and optimised, but the challenge is in the investment. We need to speak more about what can be done to channel both public and private capital into the entire value chain.

Mr. Oladapo Olatunbosun, National President of NALPGAM, in his address at the AGM emphasised that the galloping hike in the price of cooking gas in Nigeria stands as a big challenge to the marketers, therefore called on President Bola Tinubu to find ways to ensure the stability of the price.

According to him, if nothing is done to increase the price of cooking gas, it will soon be a commodity for ordinary Nigerians who will not be able to afford it, and soon it will now become the preferred fuel for few of the wealthy Nigeria in the country.

He said, “As a country we need to improve our gas utilization, if we all adopt gas, it will save the forest of its resources, improve the quality of our lifestyle, and further grow the economy.

Olatunbosun noted that Nigeria is grappling with supply-related hurdles, requiring strategic collaboration. He therefore charged the Tinubu’s administration to put machinery in motion to ensure that gas supply expansion, infrastructure growth, security enhancement, sustainable energy transition and strategic energy partnership are sustained.

He said that President Tinubu’s appointment of a Minister of State for Gas following the separation of the Gas and Petroleum portfolio demonstrated his readiness to embrace uncharted gas territories, which according to him has held back advancements in exploration activities and gas processing.

The NALPGAM President therefore revealed that despite Nigeria’s 209.5trillion cubic feets of gas reserve, gas flaring on the other hand expels 0.460 billion cubic feets daily from over 200 exploration sites across the country, thereby holding untapped potential of 2.5 gigawatts of power generations, 300,000 job opportunities for Nigerians, and a staggering LPG production.

Olatunbosun therefore charged the President to continue to strengthen strategic collaboration with the private sector especially in the establishment of critical gas infrastructure, which he described as an indispensable cornerstone for Nigeria’s energy evolution.

Professor Sunday Isehunwa, Professor of Petroleum Engineering lecturer at the University of Ibadan, in his keynote address on the theme, “Expanding Gas Utilization Beyond Imagination” charged the Nigerian Government to curtail sharp practices by some gas operators by focusing on increasing the supply of LPG to meet rising demand.

According to him, despite the efforts of Nigeria LNG(NLNG) as a major supplier of LPG in the country, additional supplies are essential through functional refineries, adequate natural gas processing facilities, and removal of difficulties in importation when necessary.

He emphasised that infrastructure development will enhance access to LPG by rural communities and drive down the price of the commodity.

The University of Don charged the President to focus more on initiating economic policies targeted at getting more Nigerians economically empowered, standard of living is raised, per capita income is increased, this according to him would impact the people’s energy preference.

He added that accessibility of the commodity can also be increased through increased economic empowerment of consumers, and relatively low costs of products.

Professor Isehunwa also noted that LPG generators are becoming increasingly popular in Nigeria and has therefore suggested the need for the regulatory authorities including the NMDPRA to enforce training and retraining of technical manpower required to do necessary upgrades and replacements.

He also warned that uncertain regulatory and policy frameworks in the country will discourage needed investors and investments. He also noted that the practice of LPG decanting has continued to be widespread in Nigeria, with unregistered roadside gas refilling shops decanting LPG to consumers.

Professor said, “With an estimated 50 million households yet to have access to LPG, especially in the rural communities, growing population and urbanisation, and a huge gas reserves base estimated at about 186 TCF and 9th in the world, the scope for expansion in gas utilization in Nigeria is beyond imagination if the Nigerian government and the private sector make more commitment towards addressing some of the mitigating issues in the gas value chain.”