Price of cooking gas rises by 100 % in one year

THE price of cooking gas has risen by 100 per cent in Nigeria’s domestic market between April 2016 and April 2017 as a result of increased demand, supply disruptions and foreign exchange issues.

A market survey over the weekend showed that the price of the 5kg rose from N1, 000 in April, 2016 to over N2, 000 in April, 2017.
It showed that the prices of 10 kg and 12.5 kg which stood at N2, 000 and N2, 500 in April 2016 have risen to N4, 000 and N5, 000 respectively.

The market survey showed that the 25 kg and 50 kg which prices stood at N5, 000 and N10, 000 in April 2016 have hit the roof at N10, 000 and N20, 000 respectively.

Investigations showed that the situation was worsened when pirates hijacked a vessel which left Port Harcourt, Rivers State to discharge 13,000 tonnes of LPG in Lagos recently.

The development, it was gathered, culminated in shortage of the product, especially in Lagos and its environs.

FOREX challenge

Mr. Dayo Adeshina, the President of Nigerian Liquefied Petroleum Gas Association (NLPGA), disclosed in a telephone interview that the challenge of getting foreign exchange and other factors have impacted very negatively on LPG supply and pricing.
He said that although the Nigerian Liquefied Natural Gas Limited has been consistent in supplying LPG to the domestic market, commercial quantity of the product was still imported from the global
market.

“We get the product with dollar in Naira equivalent, and as you can see now, a dollar to naira is around N360, unlike last year when we had an exchange of around N190 to a dollar. Part of the bottleneck that leads to the LPG pricing issues includes inadequate
and unevenly spread receiving terminals. As at today, we have only two operational terminals in Lagos. In other words, there is limited jetty availability.”

“Consequently, most of the time, the jetty is choked up because other vessels also come to discharge other petroleum products, including diesel, petrol and kerosene. But the situation may improve in future as NLNG Limited has certified another jetty called Bulk Oil Plant for product transfer.”

New terminals coming

“Also, a new terminal will come on stream in Calabar by July, and another in Port Harcourt before the end of this year. Also, NIPCO will be expanding by 5,000 tonnes, likewise Navgas by 3,000 tonnes,” he added.

Zaka Bala, a Port Harcourt-based energy analyst said in a telephone interview that many households who shifted to the use of cooking gas were being discouraged as a result of the leap in prices.

The Nigerian Bureau of Statistics stated in its latest report that the average price for the refilling of 5kg cylinder for liquefied petroleum gas (cooking gas) increased by 30 – 35 per cent on year-on year
to N2,428.38 in April 2017 from N2, 493.59 in March.

“States with the highest average price for the refilling of a 5 kg cylinder for LPG (cooking gas) were Adamawa, Bayelsa, Gombe, Imo, Jigawa, Kaduna, Kano, Nassarawa, Niger, Taraba, Yobe, and
Zamfara (N2,500), Enugu (N2, 477. 78).”

“States with the lowest average price for the refilling of a 5kg cylinder for LPG were Benue (N2, 350), Kwara and Sokoto (N2, 300) and Borno (N2, 228.57).”
However, the NLNG Limited stated that it was not responsible for the
high price as it had made adequate supply to the market.

NLNG Intervention:

The company stated that it started domestic
supply of Liquefied Petroleum Gas (LPG) otherwise known as cooking gas in 2007 when refineries became challenged and supply was grossly inadequate, thus ensuring LPG supply availability and affordability in the domestic market.

The company disclosed that the intervention, which is in line with the company’s vision of “helping to build a better Nigeria”, has significantly contributed to the stimulation and development of the domestic LPG market both in terms of increased private sector
investment across the LPG value chain as well as increased consumption which grew to over 320,000 metric tonnes in 2015.

It stated that the intervention has helped stabilize the price of cooking gas in the country.
The company indicated that NLNG has committed to delivering 350,000 tonnes of LPG into the Nigerian market annually and has signed Sales and Purchase Agreements (SPAs) with Nigerian
companies for lifting of LPG for the domestic market.
It pointed out that in response to chronic supply shortages of LPG for domestic consumption, NLNG commenced supply of LPG to the Nigerian domestic market in 2007 with the first NLNG LPG cargo
discharged at the NOJ terminal Apapa in December 2007.

“The Domestic LPG Supply Scheme is based on a Delivered Ex Ship (DES) model with LPG delivered to the market via a dedicated NLNG-chartered LPG tanker. In line with our commitment to ensure
reliability of supply in the domestic LPG market thus helping to grow the market, NLNG initially committed to make available up to 150,000 metric tonnes of LPG for the Nigerian market annually.”

Domestic LPG increase

“This has gradually been increased to 350,000 metric tonnes following the growth of the market. The Domestic LPG Supply Scheme has been an outstanding success. It has led to increased
reliability of supply, which has in turn positively impacted end user prices, and attracted significant private sector investments in infrastructure across the value chain.“ The company is collaborating with the government at the highest level to develop and implement expansion strategies that will grow the
market and expand the adoption of LPG as domestic energy source of choice,” it added.