Marketers of Liquefied Petroleum Gas (LPG), also known as cooking gas, have covertly hiked prices of the commodity by 40 per cent, as perennial product’s scarcity worsened nationwide. Investigations by New Telegraph revealed that the price of a 12.5kg cylinder has been hiked to N3,500 from less than N2,100 it sold in Lagos a few days ago.
Confirming the price hike to this newspaper by phone, Executive Secretary/Chief Executive Officer, Nigerian Association of LPG Marketers (NALPGM), Mr. Bassey Essien, blamed the situation on major shortfall in the LPG allocated for local consumption.
The Federal Government had, through the Nigeria Liquefied Natural Gas (NLNG), made commitment to delivering 250,000 tonnes of the LPG into the Nigerian market every year.
The LPG consumption, Essien, however, said had increased far above the volume allocated for local market. Further checks revealed that the price of 20 metric tonnes of the LPG, which was N2.4 million penultimate week, had increased to N3.5 million.
“The problem is that what we are being allocated is in shortage of what we consumed locally and this is the major reason for the price increase,” Essien said.
“The differential between demand and supply is sorted by the importers who look for forex on their own to import the LPG and when you add this with the fees on logistics, you will agree that the hike is unavoidable.”
Besides, he said: “We (NALPGM) are plant owners, we are not importers. The issues we raised on racket at the PPMC depots has been resolved, but what we are being faced today is the issue with forex and shortfall in demand and supply.”
The executive secretary/chief executive officer, NALPGM, which decried the emergence of price instability in the domestic LPG market, had earlier blamed the hike on delays in berthing of the LPG bearing vessels at the terminals.
This challenge, he said, caused demurrage and forced vessels to berth at the private depot, thereby raising the prices of gas.With increased awareness, the consumption of the LPG had increased over the years, Essien said.
He added that this was buoyed by government’s intervention by mandating the Nigeria LNG Limited to allocate a sizable portion of its LPG to the domestic market.
The NALPGAM executive secretary said the intervention brought about a reduction in the cost of cooking gas from N7,000 in 2007 to less than N3,000 per 12.5kg cylinder presently.
“The intervention was in line with government’s effort to build a healthy Nigeria and significantly stimulate the development of domestic usage of cooking gas,” he stated.
Former President Olusegun Obasanjo, it was, who directed the Nigeria LNG Limited to intervene in the supply of Liquefied Petroleum Gas (LPG), better known as cooking gas, to the domestic market.
The product was on the verge of disappearing from the Nigerian market before then due to the collapse of the refineries. With the country’s dwindling refining capacity, the marketers of petroleum products concentrated in the importation of petrol, diesel and kerosene, while the supply of LPG was neglected due to the high cost and low penetration in the domestic market.
Apart from the low penetration, which discouraged importers, the absence of reception facilities such as jetties for imported LPG cargoes also discouraged potential importers. With the intervention of the Nigeria LNG Limited in the supply of LPG to the domestic market, the product became readily available in the market with the price of 20metric tonnes LPG stabilising below N3.2 million before the Nigerian Maritime Administration and Safety Agency (NIMASA)’s blockade against the NLNG vessels over non-payment of purported levies.
The price of LPG, as a local product, is supposed to have crashed below the current levels but the price is always tied to the price at the international market.
Though the marketers pay NLNG in naira, the price is denominated in dollar and thus, affected by exchange rate fluctuations. Over five years ago, the country was consuming less than 70,000 metric tonnes yearly but by 2011 the figure grew to almost 100,000 metric tonnes and above 200,000mt by 2015.
When former President Obasanjo directed the NLNG to set aside a certain volume of its output for the domestic market, the company initially made available 150,000 metric tonnes for the domestic market.
After domestic consumption exceeded 150, 000 metric tonnes in 2013, the NLNG, however, increased supply to 250,000 metric tonnes yearly.
Source: NEW TELEGRAPH