Category: Energy

The Federal Government’s planned removal of fuel subsidy by next year may have been long in the works. The parlous state of the country’s refineries, unknown volume of daily petrol consumption locally, smuggling, continued importation of petroleum products and the bashing of the naira against other global currencies, may have nailed the subsidy regime. MUYIWA LUCAS reports.

As we speak today, I will not say we are in a subsidy regime but we are in a situation where we are trying to exit this subsidy or underpriced sale of PMS until we get in terms with the full value of the product in the market. When that will happen, I do not know. But I know that engagements are going on. The government is very concerned about the natural impact of price increases on transportation and other consumer segments of our society and as soon as those engagements are taken to logical conclusion, I am sure that the market price of PMS will be allowed to play at the right time.”

These were the words of Nigerian National Petroleum Company (NNPC) Limited Group Managing Director/ Chief Executive Officer (GMD/CEO) Mele Kyari, at a Ministerial briefing in Aso Villa last March.

Eight months after this statement, Kyari seems to have had an idea when the the NNPC would take its legs off the brakes of fuel price, known as subsidy. The NNPC’s helmsman, earlier in the week, sted the decision of government that the commodity would sell at its full value of between N320 and N340 per litre from February, next year. The effect of this disclosure has continued to reverberate across the country.

Indeed subsidy removal has remained a contentious issue owing to several factors. For some, it is a welcome development, but majority are of the opinion that such a move will further push the majority of Nigerians down the poverty line.

Perhaps thinking ahead of the ripple effect, the Minister of Finance, Budget and National Planning, Zainab Ahmed, said poorest Nigerians would get N5,000 monthly as a transportation grant after the removal of fuel subsidies to about 40 million Nigerians.

“Ahead of the target date of mid-2022 for the complete elimination of fuel subsidies, we are working with our partners on measures to cushion the potential negative impact of the removal of the subsidies on the most vulnerable at the bottom 40 percent of the population. One of such measures would be to institute a monthly transport subsidy in the form of cash transfer of N5,000 to between 30  and 40 million deserving Nigerians,” Mrs Ahmed said at the launch of the World Bank Nigeria Development Update in Abuja, earlier in the week.

Huge cost

For observers, the backpedalling on fuel subsidy did not come as a surprise. Several times, Kyari had warned of the impending removal of subsidy on the commodity, especially when international crude oil prices rose above $60 per barrel. “The comfort zone for Nigeria is at $58-$60. Anything above $70-$80 oil price will create major distortions in the projections of the corporation and add more difficulties to the company,” Kyari warned at a stakeholders meeting in Abuja earlier in the year.

Statistics from the Nigerian National Petroleum Corporation (NNPC) indicate that between January and September, this year, over N905.27 billion was spent by the corporation to stabilise the pump price of fuel at its current rate of between N160 and N165 per litre. Funding this has been by deducting the amount from the NNPC’s contribution to the Federation Account and Allocation Committee (FAAC).

A breakdown of the deduction shows that in June, the NNPC deducted N114.3 billion from its remittance, with an outstanding balance of N40 billion to be deducted the following month. In July, N173.13 billion was deducted from FAAC contribution and another N149.28 billion in August.

Crashing naira

Though an oil producing country, the country’s inability to have functional refineries with capacity to cater to her domestic consumption has remained an albatross as over 70 per         cent of the local petrol consumption is imported. And with the country’s local currency- the Naira, falling freely against other international currencies, the land cost of the product has become very prohibitive and unpredictable.

Refineries

While the country has made producing its fuels a priority for years, however efforts to revamp its refineries have failed, leaving it almost entirely reliant on imports. This is why the moribund refineries have remained a major contributory factor to the huge cost of subsidy.

The refineries – Kaduna Refining and Petrochemical Company; Port Harcourt Refining Company and Warri Refining and Petrochemical Company- going by a report of the NNPC based on the study of the revised consolidated refinery financial performance from February 2020 to February 2021, lost a total of N104.3 billion in 13 months due to its non-processing of a drop of crude oil.

According to the corporation’s figures, the refineries’ monthly operational expenses exceeded their income for the entire 13-month period. The refineries’ consolidated losses in between February and August 2020 were N9.36 billion; N10.3 billion; N9.69 billion; N9.55 billion; N10.23 billion; N9.1 billion and N7.1 billion, respectively. From September, October, November, and December 2020, the facilities lost N7.04 billion, N5.49 billion, N5.99 billion, and N8.28 billion. In 2021, the consolidated losses continued with N5.37 billion and N6.88 billion in January and February.

The losses were heaped on the refinery rehabilitation work even as the three refineries processed no crude in February 2021 and their combined yield efficiency was 0.00 percent.

However, the refineries, currently under rehabilitation, may improve capacity utilisation upon completion. Earlier in the year, the government awarded the modernisation of the Port Harcourt oil refinery and awarded the contract to Italy’s Tecnimont, at a cost of $1.5 billion. The project will be completed in three phases, the first within 18 months taking the refinery to 90 percent production capacity, with the second and final phases carried out within 24 months and 44 months.

Dicey

Going by NNPC’s average daily supply of petrol in August 2021, 55.99 million litres daily, implying that about N14,555,750,000 worth of petrol while the Federal Government is spending about N5,747,373,500 on subsidy daily. As at end of October, the landing cost of a litre of petrol was put at N264.65  as against the N162-N165 per litre it was sold – with government paying for the N102.65 difference on the commodity.

But why has an oil producing country found itself in a dicey situation like this? Emerging trend in the international oil market has remained a major issue. For instance, the lack of capacity of the country to produce enough quantity of oil to sell, including importing is a major set back. For instance, the Organisation of Petroleum Exporting Countries (OPEC), noted that from July to September 2021, Nigeria recorded a shortfall of 130,000 barrels of crude oil daily. The country was said to have reported crude output of 1.27 million bpd in August, down from 1.44 million bpd in July, which was also lesser than the 1.54mbpd allowed.

Still, as captured in its August FAAC report, the NNPC in May reported over 30 various disruptions in its oil production from community clashes, fire outbreaks and other operational breakdowns, leading to a production loss of 4,187,500 barrels of oil. In monetary terms, the loss could have generated about $286.9 million.

Smuggling

One fact is that it has remained very difficult for the country to get the exact volume of petrol consumed locally  daily. This indication was well captured by Kyari, who disclosed earlier that the corporation planned with 60 million litres because anytime it did supply below this  there has always been  crises. “When borders were shut last year, consumption fell to 52 to 53 million litres per day. And during the thick of the COVID-19 lockdown in 2020, the number fell to about 42 million litres.If everything works well and consumption is limited to our country, we are dealing with about 42 million litres,” Kyari said on a national television station in June.

For the Major Oil Marketers Association of Nigeria (MOMAN), in May, the local consumption of petrol jumped to 72.72million litres daily from 57.44 million litres sold in April. They hinged this on the surge in consumption to the “thriving activities of smugglers” in the industry.

Worries

The continued subsidy remained to be a source of concern to stakeholders and other international bodies. For instance, the International Monetary Fund (IMF) expressed concern over the re-emergence of fuel subsidy in Nigeria in the face of the country’s low revenue mobilisation.

The IMF, in a statement at the end of its staff virtual meeting with top Nigerian officials, said the views expressed in the statement were those of the IMF staff members and did not represent those of its  Executive Board. The IMF team was led by the Fund’s Mission Chief for Nigeria, Ms. Jesmin Rahman, in the meetings with the Nigerian authorities, to discuss recent economic, financial development and outlook.

At the end of the visit, Rahman, in the statement, said the economy had started to gradually recover from the negative effects of the COVID-19 global pandemic.

“The mission expressed its concern with the resurgence of fuel subsidies. It reiterated the importance of introducing market-based fuel pricing mechanism and the need to deploy well-targeted social support to cushion any impact on the poor,” he said.

It stated that tax revenue collections were gradually recovering but with fuel subsidies resurfacing, additional spending for COVID-19 vaccines, added to address security challenges, the fiscal deficit of the consolidated government was expected to remain elevated at 5.5 per cent of Gross Domestic Product (GDP).

Consequence to Schneider Electric’s recent white paper on the top drivers of sustainability titled “Why Data Centers Must Prioritize Environmental Sustainability, has said sustainability is business imperative for the company, AMBROSE NNAJI reports.

The Vice President, Customer Satisfaction and Quality for Secure Power at Schneider Electric, Selena Nimerick has stressed the need for efficiency towards sustainability adding that the demand for digital is growing.

While people want everything faster and without interruption, Nimerick highlighted that the data centers industry, which consumes 1-2percent of total energy and had focused on energy efficiency, is now shifting the conversation towards sustainability.

She however differentiated efficiency from sustainability as companies use the terms interchangeably. The vice president quoted the United Nations’ definition on sustainability as: “meeting the needs of the present without compromising the ability of future generations to meet their own needs”. But she insisted that, beyond the UN definition and the stakes of the industry, everyone must do better than just “use less”.

The Schneider Electric white paper according to her discussed four main reasons why data center operators and colocation providers in particular should prioritize sustainability. In her summary, Nimerick identified them as colocation tenant requirements, government regulations, business value, and ESG investment

She said that as a leader for Schneider Electric’s customer satisfaction and quality team, the company had placed the highest priority on understanding its customers’ needs so as to meet them now and in the future. Along these lines, the first reason the paper outlined to prioritize sustainability is customer needs.

According to recent data from 451 Research, colocation tenants are asking for sustainability commitments in their contracts. As companies, including the Internet Giants, take up space in colocation facilities and make public net-zero emissions commitments, they must report their Scope 3 emissions, which are emissions from their suppliers – including their colocation service providers.

Scope 3 emissions are generally considered to be underreported and more can be done to address colocation providers’ Scope 3 emissions. To increase reporting of scope 3 emissions, data centers operators can require their vendors provide Type III Environmental Product Disclosures that document the embedded carbon footprint of the product.

Beyond reporting, tenants she noted are also seeking providers who are reducing their Scope 1 and 2 GHG emissions through Power Purchase Agreements (PPAs) for renewables and alternative fuel sources. Circular economy programs like recycling for parts and batteries are also attractive to ensure waste reduction and reuse of materials.

Nimerick said that Schneider Electric’s Energy and Sustainability Services works with customers, including some of the world’s largest data center operators, to reduce emissions and negotiate PPAs. In 2020, our offers saved 134 million metric tons of CO2 on our customers’ end.2

Measuring and reporting emissions help to ensure we hold each other accountable for our role in the ecosystem and seek out new opportunities for sustainability.

Government agencies have kept an eye on the data center industry for years for its use of chemicals as coolants in HVAC equipment, the gas sulfur hexafluoride better known as SF6, and management of the build-out and use of resources. It benefits data center operators to understand the environmental impact of these elements and include appropriate actions in any sustainability plans.

Taking a closer look at SF6, the vice president noted it’s a man-made fluorinated gas that has been used for decades in the medium voltage (MV) switchgear found in data center and other applications. The properties of SF6 she said made it very well suited for electrical current breaking and insulation. Unfortunately, it has a significant impact on global warming as it’s the single, strongest greenhouse gas. In fact, this gas is estimated to remain in the atmosphere for 3,200 years. Governments have taken action to start to reduce the implementation of equipment utilizing SF6 and, in preparation, companies have been developing SF6-free alternatives.

She observed that this trend towards government action is likely to continue as more governments issue sustainability recommendations, which according to her may become regulatory requirements in the future.

Like I stated earlier, “colocation tenants are looking for colocation providers who offer sustainability benefits. This leads us to the third driver: Business Value. Without question, having a robust sustainability action plan in place is a competitive advantage as it has become part of a company’s marketing and messaging strategy. But, the business value of sustainability goes far beyond marketing.

“As a quality leader for Schneider Electric, high resiliency allows me to have a good night’s sleep and helps me relate to data center operators who lose sleep over any amount of downtime. Today’s innovative, more efficient, and sustainable solutions can also improve the performance of your data center.

According to her, Schneider recently introduced its Galaxy VL 3-phase UPS, which offers 99percent efficiency in conversion mode and is a Green Premium product. It also takes up very little floor space as its 50percent more compact than the industry average.

With Galaxy VL, Schneider Electric introduced Live Swap, a pioneering feature that delivers a touch-safe design throughout the process of adding or replacing the power modules while the UPS is online and fully operational, offering enhanced business continuity and no unscheduled downtime. I have to admit that Live Swap also helps me sleep soundly through the night”, she expressed.

On ESG investment, the Schneider Vice President observed that today more investment funds are available to companies that are mitigating their environmental impact and making their ESG commitments clear, plain and simple.

According to her, most public companies are publishing sustainability reports and adopting their commitments in their governance structure. Funding is available through bonds and some government agencies will offer financing in the form of loans, grants, and other sources for projects that reduce carbon footprint or improve energy efficiency, she added.

As the price of Liquefied Petroleum Gas (LPG), otherwise known as cookin, soars, the Managing Director Petrocam Trading Nigeria Limited, Mr. Patrick Ilo, has urged the Federal Government to ensure that the Nigeria Liquefied Natural Gas (NLNG) allocate more gas to the domestic market to meet the growing demand of the people.

He spoke during the inauguration of the Petrocam Trading Nigeria of a new solar-powered LPG filling skid station in Itele, Ogun State.

Ilo said one of the major reasons the product is costly is because NLNG is not supplying enough product to go round the country and the country has enormous users of LPG.

“As we speak, the allocation they give to people like us is very minute. They give us allocation for the commodity once in two weeks and it is around 200 metric tonnes. We depend on imported LPG,” he explained.

Yet, the instability in the exchange rate, Ilo noted, is another factor responsible for the soaring price of gas in recent times as this has affected the cost of importing the product.

He said 7.5 per cent value added tax (VAT) imposed by the government on gas importation constitutes yet another strain on gas price.

“The government  is proposing the NLNG to use Train 7 and with it, there will be more products for domestic market. In the main time the government should make concerted effort in making sure NLNG give more LPG to the market in order to meet the growing demand of the people,” he added.

IIo said the new station, with five metric tonnes capacity, is part of the firm’s contribution to making the commodity affordable to the people.

The Niger Delta Exploration & Production (NDEP) Plc’s subsidiary, Niger Delta Petroleum Resources Limited (NDPR), has been recognised for its investment in Corporate Social Responsibility initiatives.

NDEP, at the state conference/Annual General Meeting of the Nigerian Institute of Public Relations (NIPR), Rivers State Chapter, was presented with an “Excellent Public Relations Award” by the chapter for its Host Community Development Trust initiatives through which it had contributed to the economic and social development of its host communities over the years.

“We are honoured by this award from NIPR. We are also encouraged by this recognition to continue with our initiatives and Social Investments aimed at positively impacting our ever-supportive host communities,”  the Managing Director/Chief Executive Officer, NDEP, Mr. ‘Gbite Falade, said.

NDPR pioneered the Community Development Trust in 2002 as a vehicle for community development  through funding from its operations and has invested about N2.2 billion on various CSR initiatives in its host communities.

The event was attended by the Secretary to the Rivers State Government, Dr. Tammy Danagogo; NIPR President Mallam Mukhtar Sirajo;  and Rivers State Commissioner for Information Mr. Paulinus Nsirim, and Eze Igbu Upata III of Upata Kingdom, Eze Felix Otuwarikpo, among others.

Experts at the just-concluded Milken Institute Global Conference in the United States agree that there is the need to develop a coordinated approach to energy transition. SUNDAY OMONIYI reports

ONE of the biggest challenges in energy transition is the continuous discordant tunes that are being sung across the world. While some are keen on the need for renewable energy, others are increasing their frontiers for fossil fuels.

It was, therefore, instructive when experts converged for the Milken Institute Global Conference, which held in the United States  (U.S.), to dissect the energy transition challenge.

At the conference, themed: “Charting a  new course,” the out-going Chairman, Seplat Energy Plc, Dr. Bryant Orjiakor, said the best of the new journey in the energy world could only be achieved in a collaborative manner leveraging technology and innovation.

Orjiakor, who was a speaker at one of the panel sessions, focussed on “Energy and commodity markets: Structural bull or earthbound?”

“We must develop a coordinated and coherent approach to energy transition with the specific needs of several geographies in consideration,” he noted.

Responding to Seplat Energy’s timeline for energy transition and how this can be achieved, the Seplat chairman said one of the biggest challenges in energy transition was the continuous discordant tunes that pervade the industry. He noted that the recent bull market experienced in the commodities market, particularly with oil and gas, was due in part to the uncoordinated planning of the pace of energy transition. The real message is that net zero emissions does not equate to zero fossil fuels.

According to him, massive withdrawal of funding for fossil fuel projects has led to a market imbalance where with every slight rise in demand comes with a sharp increase in commodity prices as seen in the uptick in the price of coal.

“Energy transition must be done in a collaborative manner where there must be a balance between net-zero /carbon neutrality and energy poverty in Africa and much of the developing world. To put this in context, Nigeria for example with a population of over 200 million people has installed grid capacity of 12,500mw, availability of grid power to the population is only 3,000 – 4,000mw. 25,000mw off-grid power is supplied by diesel generators,” Orjiakor noted.

He added: “Over 60 per cent of the population has no access to electricity and rely heavily on biomass and kerosene for cooking. The challenge remains: how do we prioritise a transition to renewables overnight without addressing the energy poverty that exists with the available fossil fuel. Nigeria cannot afford to not utilise its over 200 Tcf of gas reserves in the bid to address the UN SDG7 as it pertains to universal energy access. This gas reserves will leapfrog the transition.”

Orjiakor agreed that going by the trend, there is the high possibility of oil surging beyond $100 per barrels in the near term, especially if it is considered that coal plants cannot sustain demand in China.

“The bull market is not isolated and oil prices will experience volatility in the long term. The phenomenon of energy transition has been around for a while – e.g. the transition from coal to oil and then to gas. Energy transition in the past typically took about 100 years and keeps evolving over time. The current energy transition push is mainly driven by climate change and the urgency of now; however, it will not happen overnight,” Orjiakor added.

According to him, the current energy transition is also driven by politics, climate activism and policies whereas the energy transition should be driven by technology and innovation in a coordinated manner by all players. “The recent call by the UN Secretary-General for a complete stop to funding fossil fuel projects I consider as policy activism and contradicts the UN SDG7 aspiration as the current requirements cannot be met by renewable energy sources alone,” he added..

A more pragmatic approach in Orjiakor’s opinion will be to invest in the technologies that will drive net zero aspirations as well as engage policies and incentives to encourage carbon capture and sequestration.

in 12 months, Nigerians are said to have spent N2.2 trillion on fuel consumption. Now, with a global crude oil price rising steadily, surging above $85 per barrel mark earlier this week, tougher times lurks in the corner for citizens, MUYIWA LUCAS reports.

THE Nigerian National Petroleum Corporation (NNPC) Monthly Financial and Operations Report for May, 2021 gave a clear indication on the fuel consumption, especially on the premium motor spirit (PMS) or petrol spent of Nigerians.

During the period under review, between June 2020 and May 2021, consumers spent N2.153 trillion on petrol. In this same period, 2.234 billion litres of petrol was supplied into the market. As at May 2021, crude oil price averaged between $62 and $65.

Now with a steadily rising crude oil price, which rose beyond $85 per barrel in the international market this week, concerns are rife that Nigerians will have to spend more on fuel consumption in the days to come. This is because though Nigeria is an oil producing nation, yet, the bulk of her fuel consumption needs are imported, a situation that has been further worsened by the poor state of the country’s refineries.

But on the export side, Nigeria may be enjoying increased revenue from the raw product. For instance, NNPC Group General Manager, Group Public Affairs Division, Mr. Garba Deen Muhammad, explained that total crude oil and gas export sales was $219.75 million in May 2021, representing 180.29 per cent increase from April 2021. He added that between May 2020 and May 2021, the corporation exported crude oil and gas worth $1.64 billion.

Muhammad said crude oil export sales contributed $181.19 million (82.45 per cent) of the dollar transactions compared with $4.22 million contribution in April, while the export gas sales component stood at $38.56 million in May.

Rising cost

However impressive as these figures may seem, experts said the feat recorded in terms of revenue on these is washed away by the continuous importation of refined petroleum products. Nigeria currently imports 100 per cent of all refined products under an arrangement called Direct-Sale-Direct-Purchase (DSDP). This is further complicated by the rising cost of the commodity in the global market for which the NNPC has had to be subsidising.

Yet, more worrisome is that figures and data have shown that progressively yearly or quarterly, cost of importing fuel or finished products from crude oil has been on a volatile increase. According to data from the National Bureau of Statistics (NBS), in the first six months of this year, petrol import hit N1.47 trillion, representing more than 73 per cent of the amount spent for the same purpose for 2020 and about 86 per cent of amount spent in 2019 for the same fuel import. NBS data further showed that in the first half of last year, N1.09 trillion was expended on petrol imports, a sharp increase from its preceding year which stood at N766.06 billion.

Burden

What seem to be like an end to subsidy regime began in March, last year, following the reduction of the pump price of petrol from N145 per litre to N125 per litre after a fall in international price of crude oil.

But curiously, since last January, irrespective of the global price fluctuation in oil, the government has left the pump price of petrol unchanged at N162-N165 per litre. The NNPC, which has been responsible for the cost differentials, has in the first half of this year incurred N756.99 billion as subsidy on petrol.

Although the rising cost of crude oil internationally, rising beyond $85 per barrel last week is meant to be a blessing for Nigeria, sadly, other extraneous factor like the foreign exchange rate, and the growing rate of subsidy have been an albatross robbing the country of the gains it would have made.

NNPC Group Managing Director, Mele Kyari, emphasized that NNPC could no longer bear the burden of underpriced sales of PMS, meaning that at some point the market price will have to be implemented. The NNPC has maintained an ex-depot price of N148/litre since February. Ex-depot price is the cost of petrol at depots, from where filling stations purchase the commodity before dispensing to final consumers. The Federal Government as signalled that by next year, there would be an end to subsidy regime.

More spending

By implication, if the situation persists, and the market price of PMS will be allowed to play at the right time, the cost of fuel consumption to Nigerians would be on the rise. With landing cost of the product said to be about N269 per litre, considering other factors, fears are rife that the price per litre may rise to anything between N280 and N300.

China and other Asian buyers have been snapping up supertankers of American sour crudes for delivery in November. Asian demand for U.S. oil is rising as the energy crisis boosts prices for other crudes that are priced against the global Brent futures contract.

They are seeking more for December, according to traders. Most buyers are seeking U.S. grades that had recently slumped to the lowest levels in over a year, with an added incentive after China’s Government awarded millions of tons of crude oil import quotas.

A wide spread between Brent and West Texas Intermediate oil futures would accommodate higher U.S. crude exports, said Elisabeth Murphy, ESAI Energy LLC upstream analyst for North America. WTI has been trading at least $3 a barrel under Brent since August, a discount that generally favours U.S. crude exports.

Asia’s increased appetite for U.S. crude comes after a widespread recovery in road-fuel and freight activity and ahead of a winter that will likely see more oil demand from the power sector. This is also happening against a global supply deficit in fossil fuels that is driving higher prices.

As the race for cleaner energy use and reduction in climate pollution continues, the Coca-Cola Hellenic Bottling Company (CCHBC), the parent company of the Nigerian Bottling Company (NBC) Limited, has announced its commitment to achieving net zero emissions across its entire value chain by 2040.

This it aims to achieve through the adoption of several initiatives, including the investment of 250 million euro in emissions reduction initiatives by 2025; switching to 100 per cent renewable electricity and low carbon energy sources; accelerating efforts towards low carbon packaging by increasing rPET use and adopting package-less and refillable options and removing plastics in secondary packaging.

The company also plans to provide energy-efficient and eco-friendly coolers to customers; reduce emissions from agricultural ingredients and implement a “Green Fleet” programme to switch to low and no carbon alternatives.

Its Chief Executive Officer, Zoran Bogdanovic, said the initiative represented the company’s “commitment is the ultimate destination of a journey that we started many years ago. It is fully aligned with our philosophy to support the socio-economic development of our communities and to make a more positive environmental impact. Both are integral to our future growth. Although we don’t yet have all the answers, our plan, track record and partnership approach give us confidence that we will deliver.”

Read Also: Gas: Price galloping out of hand

Speaking for one of the company’s partners, Markus Pfanner, Vice President, Sustainability Tetra Pak, said: “As Tetra Pak also has a net zero target and SBTi approved 1.5o aligned 2030 targets, we look forward to working with Coca-Cola HBC to reduce GHG emissions and together achieve our joint aims.”

In a statement, the NBC noted that it is playing its role to accelerate efforts towards reaching this target through several interventions. For instance, the NBC started the transition of four of its manufacturing plants in Maiduguri, Kano, Asejire and Abuja, to renewable energy sources through the installation of solar power infrastructure. These efforts, the firm noted, delivers up to 2,650 KWP to the facilities, adding that the expansion phase would even deliver more carbon footprint reduction.

The NBC also said it has completed the installation of Combined Heat and Power Plants (CHP) at four of its manufacturing plants which has resulted in significant reduction of its carbon footprint across the country.

On the company’s interventions, the Managing Director, NBC, Mathieu Seguin, said: “Climate change is a global emergency that requires deliberate, proactive and coordinated efforts to be mitigated.  We are passionate about leading efforts that strengthen the sustainability of the environment while supporting the socio-economic development of our communities.”

Through an approved science-based target, the CCHBC is aiming at a 25 per cent reduction in its value chain emissions by 2030 and a further 50 per cent reduction the following decade. To address the 90 per cent of emissions resulting from third party actions, the company is broadening partnership approach with suppliers and investing in other climate protection measures where emissions could not be eliminated.

Despite last month’s impressive production and importation figures for Liquefied Petroleum Gas, the cost of the commodity is defying all odds, rising almost weekly. The situation has aggravated public concerns of the public, which fear that the commodity may get out of hand, MUYIWA LUCAS reports.

All things being equal, the disclosure by the Petroleum Products Pricing Regulatory Agency (PPPRA) that of the 76,578.986 metric tonnes (mt) of the Liquefied Petroleum Gas (LPG) supplied across the country last month, only 49,453.081mt was locally produced and 27, 125.905MT was imported.

In a statement, PPPRA’s General Manager, Corporate Services, Mr. Kimchi Apollo, said Nigeria produces most of its LPG needs, praising the Federal Government’s policies, including the National Gas Policy (NGP), Nigeria Gas Flare Commercialisation Programme (NGFCP), National Gas Expansion Programme (NGEP) and Decade of Gas Declaration as being responsible for the progress in the sector.

“It is worthy to note that the quantity of LPG sourced locally rose from 38,040.457MT in August to 49,453.081MT in September, while importation reduced from 47,224.346MT to 27,125.905MT,” he said.

While Apollo’s submission may be right given that the figures bandied showed that over 66.58 per cent of domestic gas supplied and consumed in September, was produced locally, the almost0weekly rising cost of the commodity may have affected the achievement.

Since April, the cost of LPG has been on the rise, from as low as N2,800, it reach an unprecedented high of N7,500 for 12.5kg. The cost of filling a 12.5kg cylinder of gas increased from an average of N6,200 in July, to N7,000 as of September, rising to N7,500 as at end of last week.

Market undersupplied

Hopes of a quick price recovery of cooking gas may be a tall order for now. The Group Managing Director, Nigerian National Petroleum Corporation (NNPC), Mele Kyari, warned that the price surge might linger until the volume supplied to the domestic market was increased.

Kyari, who gave reasons for the price surge during a visit to the Department of Petroleum Resources (DPR)  headquarters in Abuja, assured Nigerians that the corporation was working with relevant agencies to ensure that the supply increased to bring down the price of the product.

“Today, this country is undersupplied with gas; we can tell you that we are having difficulty filling our network across the country with gas. So that means that once supply is weak, it will affect pricing. Today, the supply mechanism of LPG is very weak. So, we are collaborating extensively to ensure that we are able to extract LPG from our gas resources so that it can be made available to the market.

“To make price more affordable, we are working towards providing more volume of gas into the domestic market. By doing this, we make it very close to home and extend the networks, once supply is high, it will definitely bring down the prices,” he added.

Read Also: Cooking gas: Consumers resort to firewood over rising cost

VAT reintroduction

Several factors may have led to the rising gas price, including inadequate in-country supply, inflation, foreign exchange scarcity/naira devaluation and arbitrary charges by government agencies. Specifically, the reintroduction of Value Added Tax (VAT) on imported LPG after the Federal Government, in 2019, gazetted the removal of VAT on cooking gas to increase its domestic utilisation, is also said to be a major cause of the rising cost of the commodity.

However, in a turnaround, the DPR argued that the VAT had to be re-imposed on imported LPG to attract investments to gas production. This reintroduction of the 7.5 per cent VAT on imported cooking gas has placed the DPR and oil marketers at loggerheads.

According to Major Oil Marketers Association of Nigeria (MOMAN), the spike in the global price of LPG, which is largely imported and the inclusion of VAT to the already high price negate the government’s policy on the adoption of LPG by Nigerians.

MOMAN, a key stakeholder in the downstream sector of the industry, appealed to the Federal Government to remove the 7.5 per cent VAT on the product, warning that the ta would hamper the adoption of gas and create a barrier to the objectives of the ‘Decade of Gas’ agenda of the government.

“I think one of the big discussions that is going is how that can be eliminated because the tax  creates a barrier to the objectives of the Decade of Gas, which is to increase the penetration and adoption of LPG, among other things, as an alternative to biomass. So, we are hoping that there will be some headway in that direction,” MOMAN Chairman, Mr. Olumide Adeosun, said, adding: “Unfortunately, we still don’t produce sufficient domestic LPG; so we are having to do a lot of imports and we are seeing a spike globally in the price of LPG. Domestically, what can we do? I think there have been discussions around the VAT that has been levied on the product.”

Fears

Yet, the progressive hike in the price of cooking gas has led marketers of LPG to warn that if the trend continues, a 12.5kg gas may sell for as much as N10, 000 by year end. The marketers rued the supply shortage rocking the sector, which they blamed for the seemingly uncontrollable increases in the price of the commodity.

“The rise in prices of gas has driven more Nigerians to seek alternative sources of fuel like charcoal, firewood, sawdust, among other energy sources whose prices have started rising as well,” Executive Secretary, National Association of LPG Marketers (NALPGAM), Mr Bassey Essien, lamented.