Cooking Gas Price May Rise Further Over Domestic Supply Gap

There are strong indications that the price of Liquified Petroleum Gas (LPG), known as Cooking Gas, may rise further over the domestic supply gap.

Cooking gas currently costs be­tween N1,000 and N1,200 per kilogramme across the country and there are fears that the price may rise further due to scar­city, which marketers attribute to supply interruption.

The Nigeria Liquefied Natural Gas (NLNG), had, on 13th January 2022, stated that, 100 per cent of Nigeria’s Liquefied Petroleum Gas (LPG) produced will be supplied to the Nigerian markets for domestic consumption.

The NLNG explained that the reason for doing this is to increase the availability of LPG in Nigeria, diversify the uses of LPG, and also support the Federal Government’s decade of gas initiative.

To this end, the president of the Nigerian Association of Liquified Petroleum Gas Marketers (NALGAM),  Oladapo Olatunbosun, has urged the federal government to check the price increase proactively.

He blamed the scarcity of gas in some sections of Lagos on sup­ply disruption, claiming that the tanker scheduled to offload in the state had not done so.

He stated that, ‘Information at our disposal reveals that Nigerians are facing hard times getting the product.’

He cautioned that, if the Feder­al Government does not intervene, the price of 12.5kg of cooking gas might soon reach N18,000, claiming that the volume marketers used to purchase for N8 million is now being sold for N14.5 million.

Olatunbosun said: “Go to the North and the Far East and see what people are facing.

 In some places, they are buying at N1,300 per kg because the cost of buying at the terminal has risen very high. As of today, terminals are selling for N14.5 million, which used to be about N8 million and N8.5 million.

“The supply has also been somehow epileptic. The vessel from NLNG went to Port Har­court twice, which is why there is a delay in Lagos. The vessel came back to Lagos two days ago. They just offloaded it, and the quantity it brought was not that substantial. We are expecting it back in about a week.

“So, we are using this oppor­tunity to call on the Federal Gov­ernment of Nigeria, particularly the new Minister of Gas, to pay attention to LPG. LPG is a product that can serve all Nigerians, both the young and the old; everybody who needs gas.

“And for the fact that the fuel subsidy removal is biting hard on people, electricity is not regularly supplied, people do not have any other means to cook than gas; it is now becoming what they cannot afford and it therefore means our forest will suffer for it.

“So, we need to look into the supply, and what is the price that is coming to the market? What prices are they selling at? What is really behind the hiked price and what role can the government play? Is it the role of intermedi­aries? Is it the role of the middle­men? What is actually causing the high price?”

According to him, while some people blame the hike on the forex crisis, there is an element of profi­teering in it.

He added that, “This is where the government has to beam its searchlight and caution all the players and also have a regular meeting with the terminal opera­tors and off-takers on how we can protect Nigerians. The poor Nigerians are suffer­ing; gas is getting out of the reach of Nigerians, and it is not making life easy for anybody.

“We are not happy about that. As businessmen, we are suffering the cost of buying, and the cost of doing business has also gone up. And the product is not all that available. So, while the government is tackling regular supply, it also needs to work on the major suppli­ers, the off-takers, so that a little of profiteering should be downplayed now to protect the poor Nigerians so that gas can be affordable.”

But in a statement on Wednesday, NLNG denied  media reports insinuating that a price hike by the company is responsible for the surge in the price of domestic Liquefied Petroleum Gas (LPG), commonly known as cooking gas, in the domestic market and predicting that scarcity looms as a consequence.

NLNG dismissed these media reports as speculative and indicative of a fundamental misunderstanding of Nigeria’s intricate market dynamics.

The NLNG said it has been making defining contributions to the domestic LPG market, spurring the steady growth of the nation’s DLPG market volume from less than 50,000 metric tonnes of imported LPG in 2007 to over 1.3 million metric tons of both domestic and imported LPG today.

According to the statement, the NLNG currently delivers over 450,000 metric tonnes per annum of Butane, the main product in cooking gas and has embarked on domestic propane supply to further grow the market.

The company said it has committed its entire Butane and Propane production to the domestic market from 2023 and, despite feed gas challenges, continues to supply LPG to the domestic market, accounting for approximately 40 per cent of the total market volume.

Since the beginning of the year, NLNG has delivered over 380,000 metric tonnes of LPG using the Company’s dedicated LPG vessel.

The NLNG said it has remained committed to delivering domestic LPG to locations as close to the market as possible by diversifying delivery points starting with Lagos in 2023, fostering competition among terminal owners and ultimately reducing consumer supply chain costs. Efforts are ongoing to reach terminals in Warri and Calabar as soon as the challenges limiting safe delivery of volumes to these other locations are cleared.

“The domestic LPG market, like any other, is subject to dynamic market forces and various external factors. Such factors as changes in exchange rates, and escalating price benchmarks mirroring crude oil prices, and the Panama Canal drought-induced vessel scarcity impacting transport costs especially for imported LPG, have had significant effect on energy prices in the recent times and could undoubtedly be some of the reasons for recent price hikes witnessed in the domestic market.

“NLNG maintains an unwavering commitment to ensuring the reliable supply of its LPG production to the domestic market at prices that are reflective of the market. The Company is collaborating with relevant industry stakeholders to achieve this objective and will remain focused on achieving its mission through this avenue among others.” it added?

Meanwhile, report says Nigeria’s LNG export facility at Bonny remains under force majeure more than a year after it was first declared with output from the six-train plant having fallen below 50 per cent of its nameplate capacity.

The Nigeria LNG (NLNG) declared force majeure on October 17 last year after flooding impacted the ability of gas suppliers to feed gas to the facility and remains in place due to continued disruption to gas feedstock supply.

“Supply of gas to the Bonny plant still faces major constraint and is keeping production at the plant well below capacity,” an NLNG spokesperson said, adding that force majeure remains in place.

The six-train LNG export facility has a capacity of 22.5 million mt/year (31 Bcm/year) but is being expanded to 30 million mt/year with the addition of a seventh train.

Last year, Nigeria’s LNG exports totaled some 14.7 million mt, according to data from S&P Global Commodity Insights, and so far this year have reached 12.5 million mt.