This is why the Price of Cooking Gas has increased – PensionNigeria

This is why the Price of Cooking Gas has increased

Have you ever wondered why the average price for refilling of a 12.5kg cylinder for Liquefied Petroleum Gas (Cooking Gas) has increased from around N3000 to N4,500. An open letter from the Nigerian Association of Liquefied Petroleum Gas Marketers (NALPGAM) to the minister of State for Petroleum Resources titled “LPG Marketers can no longer Breath, as Prices Choke Consumers” has reveled the reasons for the increase in the price of cooking gas.

Below is the letter;

OPEN LETTER TO THE MINISTRTER OF STATE FOR PETROLEUM RESOURCES: LPG MARKETERS CAN NO LONGER BREATHE, AS PRICES CHOKE CONSUMERS

The Federal Government set a target of achieving a 40% energy consumption switch from petrol, kerosene and diesel to the wider use of Liquefied Petroleum Gas in vehicles (auto-gas), households, power generation and industrial applications, towards the attainment of five million metric tons domestic utilization and creation of an estimated 500,000 job opportunities nationwide in five years.

The Federal Government in line with its aspiration to deepen gas utilization in Nigeria, has urged investors to harness investment opportunities in the entire gas value chain to bridge the gap in other domestic gas usage in the country. The significant growth in local consumption LPG has been hinged on many Nigerians converting to cooking gas for domestic and commercial uses. The country’s local consumption which hitherto stood at about 70,000 metric tons as at 2007 had grown to over One million metric tons as at end of 2020.

ISSUES

1. A major challenge with the LPG utilization in Nigeria is the issue of inconsistent availability and ever galloping gas price with the attendant depot landing costs and other associated charges. The domestic availability has been skewed majorly to 65% import dependence while only 35% has been attributed to local supply.

The price of LPG has exponentially skyrocketed over the last few months. The cost of LPG early in 2020 was N3.4m per 20MT truck, but by December 2020, it had gone up to N5.4m; N5.6m in January, 2021 and N6m per 20 MT by February, 2021.

The galloping price increases have not only choked marketers but have also strangulated consumers, thus making a mockery of the whole gas expansion plan of the government.

Lately the gains made in the huge conversion rate to LPG usage which had moved the per capita consumption from 1.5kg to over 3kg have gradually reduced because of the domestic costs of LPG, an ominous and imminent danger the Government policy on LPG faces.

Majority of users of LPG are gradually reverting to the use of kerosene and firewood. The nation has to be saved from the impending social upheaval consequent upon LPG getting out of the reach of the masses whose disposable income can no longer afford the purchase of even firewood to cook, with the obvious known health implications.

2. The LPG operations of Nigerian Petroleum Development Company (NPDC Oredo IGHF Plant), Ologbo, Edo State are dominated by “middlemen” in the distribution chain. These middlemen without identifiable LPG bottling plants are hawking LPG allocations from plant to plant for patronage at exorbitant prices.

Equally disturbing is the fact that gas plant owners in the Edo/Delta region with their verifiable large storage capacities have not been granted any off taker facility despite the location of the project in the region; the coming of which had been viewed as beneficial to investors in the catchment areas of the project and an alleviation of the tedium of traveling out of the state to other states to buy cooking gas.

CONCLUSION

We hereby appeal to the Government through your office to put in place a policy that would encourage full domestication of LPG whereby every local producer of gas is mandated to domicile all molecules produced in the country as against the situation of being a major exporter of gas produced as well as a major importer of gas.

If all molecule of gas produced should be domesticated, the local markets will be adequately supplied and prices stabilized. By this way the concerted
efforts of the Federal and State government agencies and parastatals to encourage the use of gas would not be in vain.

Thus we urge your urgent intervention to address the plight of stakeholders; else all the expansion programme of the government would be an exercise in futility.

Accept the assurances of our highest regards.

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