Apart from the effects of lingering fuel scarcity, Nigerians are confronted with the soaring cost of Liquefied Petroleum Gas (LPG) or cooking gas – a double assault on their psyche and pocket. MUYIWA LUCAS reports.
The economics theory of scarcity at the source of production may aptly describe the gas situation in the country. This is because notwithstanding the huge gas reserves in the country, Nigerians are faced with an existential challenge as they are not just battling escalating prices of foodstuff, but also are spending more to cook.
The cost of cooking gas, also known as Liquefied Petroleum Gas (LPG), has drastically increased. The Nigeria LNG, which has been very active in the production and supply of the commodity, cannot produce all that is needed domestically.
Group Managing Director of the Nigeria National Petroleum Company (NNPC) Limited, Mele Kyari, while appearing before the House of Representative Committee on Petroleum (Downstream), headed by Abdullahi Gaya, over the rising cost of diesel and gas earlier in the week, noted that the only way to tackle the rising price is to increase the production of crude oil. He blamed the problem on the non-functioning refineries.
Kyari said besides that the Russia-Ukraine war was affecting supply of products across the world, most major oil companies were also shutting down due to the energy transmission to eliminate fossil fuel.
The National President, Nigerian Association of Liquefied Petroleum Gas Marketers (NALPGAM), Oladapo Olatunbosun, said a reason for the rising cost of cooking gas was as a result of sharp practices in the industry. He said unlike diesel which is imported, cooking gas was produced in the country, but profiteering was a problem.
“There is a lot of profiteering going on in the LPG business. The kind of market we are seeing, which the terminal owners are seeing, I must be sincere, there is a lot of cross-border trading. There are infrastructural challenges, but there are still human interventions that we need to control. How many gas plant owners are actually off-takers? There is production going on in Edo. How many of them are they selling? People come from different angles who are portfolio investors, they buy gas and they hack on it, the price goes up,” he said.
The larger chunk of the LPG needed is imported and because of this, it has fallen victim to the ongoing Russia/Ukraine war.
Another factor that is responsible for the increase is the issue of foreign exchange. The Naira has been highly devalued. Major importers of the commodity are also struggling to get foreign exchange to purchase the commodity.
In the retail market 12.5 Kg cylinder ranges from N11,000 to 12,000 depending on where it is purchased. This was against the N9000 per unit cost of 12.5KG about a month ago.
The National Bureau of Statistics (NBS) in its Liquefied Petroleum Gas (cooking gas) Price Watch and National Household Kerosene Price Watch for last month stated that the average retail price of LPG also known as cooking gas increased by 89.28 per cent from N2,071.69 in May 2021 to N3921.35. Monthly, cooking gas price rose from N3800.47 recorded in April 2022 to N3921.35.
The NBS report showed that the highest average price for refilling a 5kg cylinder of Liquefied Petroleum Gas (Cooking Gas) was recorded in Gombe with N4366.67, followed by Bayelsa with N4325 and Adamawa with N4250. However, the report says Yobe recorded the lowest average price with N3200; this was followed by Ogun and Ondo with N3450 and N3480.77.
In addition, prices analysed by zones showed that the average retail price for refilling a 5kg cylinder of Liquefied Petroleum Gas (cooking gas) was highest in the Southeast with N4094.39 followed by the Northcentral with N3989.98 and Southsouth with N3977.72, while the Southwest recorded the lowest average retail price of N3719.53. The average price for refilling a 12.5kg cylinder of Liquefied Petroleum Gas (cooking gas) increased to N8726.30 in May 2022 from N8164.37 in April 2022 representing a 6.88 per cent monthly increase.
Similarly, yearly, the average retail price for refilling a 12.5kg cooking gas increased by 103.46 per cent from N4288.95 in May 2021.
In many parts of Lagos, the price of 12.5kg is N11,000 while in Ibadan, a 6kg cylinder has hit N4000. This was sold at between N 1,500 and N2000.
As consumers continue to search for a reprieve, the question is: “At what cost will LPG sell next week?”