Price Of Domestic Fuel Is Indexed To International Pricing Model: Nigeria LNG

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Following worries over the hike in the price of cooking gas, the Nigeria LNG has explained that the price of the domestic fuel is indexed to the international pricing model.
The price of 12.5 kilogrammes of Liquefied Petroleum Gas (LPG), better known as cooking gas has averagely risen from N4,039 to N8,260 across all major cities in the federation between October 2020 and October 2021, representing an increase by more than 105 per cent, a price survey by THISDAY has revealed.

The price hike within a timeframe of 12 months, has caused a profound distortion in household budgets across all strata of the population.

The NLNG has however denied being responsible for the supply shortfall, insisting that the price of domestic cooking gas is indexed to the international pricing model.

Following the increasing switchover to the use of dirty fuels such as coal and firewood, the Environmental Rights Action/Friends of Earth Nigeria (ERA/FoEN) said if the hike in cooking gas price is not addressed, the attainment of a clean and green environment would be a mirage.

Currently, Nigeria consumes about 1.2metric tonnes (MT) of LPG, also known as cooking gas. However, the NLNG can only meet 450,000mt of the market requirements, leaving marketers to import the remaining 750,000mt.

Apparently, with the deficit of 750,000mt, the price of cooking gas has been on the steady increase across all states of the federations since 2020 while the federal government has not been able to intervene decisively to cushion its effects on household budgets.

Apart from the deficit, the price disruption had been attributed to unavailability of foreign exchange for importation, naira depreciation, rising inflation, arbitrary charges by government agencies of the federal government, and implementation of 7.5 per cent Valued Added Tax (VAT).

In Lagos metropolis, for instance, 12.5kg cylinder of cooking gas sold for N3,700 in most gas stations in October 2020, is being sold for N7,500 in October 2021, accounting for 102.7 per cent within one year.

The same quantity of cooking gas, which cost N4,500 in Federal Capital Territory in October 2020, is now sold for N8,500, representing an increase of 88.89 per cent.

In Ibadan, Oyo State, also, the survey revealed that 12.5kg cooking price across major stations was N3,440 in October 2020 and N7,250 penultimate week, indicating a 110.75 per cent increase.

Across the South-west states, 12.5kg cooking gas price increased by 122.2 per cent in Abeokuta, Ogun State; 110.5 per cent in Ado-Ekiti, Ekiti State; 132 per cent in Akure, Ondo State, and 94.44 per cent in Osogbo, putting pressure on household budgets.

Also, most gas stations in Port Harcourt, Rivers State sold 12.5 kg cooking gas at N3,500 in October 2020, and N7,800 in October 2021, representing a 122.85 per cent hike.

In October 2020, as shown in the price survey, most gas stations in Warri, Delta State retailed 12.5kg cooking gas price at N3,600 but the price has since soared by 142.85 per cent, bringing the price to N8,500.

Within the same timeframe, the retail price of 12.5kg cooking gas rose by 100 per cent in Asaba, Delta State; 62.5 percent in Calabar in Cross Rivers State; 166.67 percent in Uyo, Akwa Ibom State; 100 per cent in Yenagoa, Bayelsa, and 134.37 per cent in Benin City, Edo State.

In the case of Kaduna, also, the retail price of 12.5kg stood averagely at N3,500 in October 2020 across the metropolis, though rose significantly to N8,000 in October 2021 by 128.5 per cent.

Similarly, in Kano, the price maintained almost the same trajectory as 12.5kg cooking gas valued at about N3,700 in October 2020. However, the same quantity now averagely costs N7,500, representing an increase of 102.7 per cent with the same timeframe.

In North-west, the price surged by 100 per cent in Sokoto; 50 per cent in Katsina; 87.5 per cent in Birnin Kebbi, Kebbi State; 105.25 in Dutse, Jigawa State and 100 per cent in Gusau, Zamfara State.

Compared with its retailing value standing at N3,750 per 12.5kg in October 2020, as shown in the survey, Bauchi in North-east recorded a price escalation of 150 per cent increase by October 2021 as cooking gas now cost N9,375 per 12.5kg.

In Yola, Adamawa State, however, the price trend was marginally lower when compared with price status in Bauchi. From N3,500 in October 2020, the price of 12.5kg cooking gas rose to N7,800 in October 2021, which accounted for a 122.85 per cent increase.

In North-east, largely, Gombe recorded a 100 per cent price increase; Jalingo in Taraba State 73.9 per cent; Damaturu in Yobe State 112.5 per cent; Maiduguri in Borno State 97.67 per cent and Potiskum in Yobe State 112.5 percent.

In Onitsha, Anambra State, major stations retailed 12.5kg cooking gas at N4,000 in October 2020, and N9,000 in October 2021, representing an increase of 125 per cent.

In October 2020, the trend was relatively similar in Enugu with 12.5kg cooking gas price selling for N3,900 in October 202, and N8,700 during the period under review, representing a 123 per cent hike.

The trend was similar in other major cities in South-east as Aba in Abia State recorded a 134.28 per cent increase in the prices of 12.5kg cooking gas; 125 per cent in Awka in Anambra State; 100 per cent in Abakaliki in Ebonyi State and 89.13 per cent in Owerri, Imo State.

In the case of Minna, Niger State, the cooking gas price recorded a significant increase of 157.14 per cent, rising to N9,000 from N3,500 between October 2020 and October 2021.

In Ilorin, Kwara State, it rose from N3,250 to N7,350 during the period under review, indicating a 126.15 per cent hike.

In Jos, Plateau State, it rose from N4,000 in October 2020 to N8,200 in October 2021, increasing by 105 per cent.

The price also rose by 97.67 per cent in Makurdi, Benue State; 22.82 per cent in Lafia in Nasarawa, and 166.67 per cent in Lokoja, Kogi State.

Concerned about the price hike, the Executive Secretary of the Nigerian Association of LPG Marketers, Mr. Bassey Essien blamed the federal government, citing the frustration experienced by the LPG marketers in accessing foreign exchange and the impact of the implementation of 7.5 per cent VAT, among others, as the major factors fueling the price escalation.

The executive secretary, therefore, noted that the federal government and people in authority “are not sincere with the populace, hence the carefree attitude.”

NLNG, in a statement by its General Manager, External Relations and Sustainable Development, Eyono Fatayi-Williams, and Head, Media Relations and Corporate Communications, Anne-Marie Palmer-Ikuku, claimed that it was inaccurate to state that NLNG produces 22 million tonnes per annum (mtpa) of cooking gas.

The gas conglomerate clarified that it “is primarily an export company that produces 22 mtpa MTPA of LNG and 5 mtpa of Natural Gas Liquids (NGLs).

It disputed claims that NLNG contributed “to the supply shortfall of cooking gas in Nigeria and consequent price hike.

The price of LPG in the domestic market is dependent on several market factors, including the forces of demand and supply.”

On the supply side, according to the statement, NLNG plays a pivotal role in the Nigerian domestic LPG market in line with the commitment it made to help deepen the market.

The statement pointed out that the company recently increased the volume of its annual commitment to the market from 350,000 to 450,000 metric tonnes, which is about 100 percent of its Butane production.

It said: “Butane gas is less volatile and is, therefore, suitable for cooking. By committing 100 per cent of its Butane production, NLNG has prioritised the domestic market, thus realising its domestic supply target safely.

“NLNG’s current maximum Butane production meets about 40 per cent of domestic demand. The balance is supplied by other domestic producers or via imports. Therefore, NLNG’s production alone is not sufficient.

“To achieve its aspiration for domestic supply, a dedicated 13,000 metric ton vessel, LPG Alfred Temile, delivers the product to the market through Lagos and Port Harcourt terminals.

“The vessel’s delivery to these terminals is occasionally hampered by challenges at the terminal, including storage capacity, terminal access, draft restrictions, and prioritisation of other products over LPG,” NLNG explained in its two-page statement.

The company buttressed the position of the marketers that cooking gas “is most competitive compared to all other alternatives (imported and domestic supply).”

NLNG, therefore, claimed that it had initiated a new drive towards deepening the domestic LPG market in line with its vision of helping to build a better Nigeria.

It added that the company is optimistic that the eventual completion of its Train 7 Project would further deepen the domestic LPG market.

Warning the federal government on the implication of the price hike, Environmental Rights Action/Friends of Earth Nigeria (ERA/FoEN) said if not addressed, it would hamper the drive for a clean environment.

ERA/FoEN Programme Manager, Mr. Nosa Tokunbo, therefore, called on the federal government to address the rising cost of cooking gas, which it said, is getting out of reach of the common man.

Tokunbo pointed out that the price increase would force people to go back to the era of using firewood as a means of cooking because of the health implications to humans and the ecosystem.

He, however, urged gas consumers “to explore other alternative means of cooking their meals like the use of a sand stove, solar cooker, and electric stove to cook their meals.

“No matter how painful, there is no alternative to maintaining a cleaner environment. We won’t encourage people to go back to the use of firewood because of the health implications and other environmental impacts,” he added.
– Thisday

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