As Nigerians grapple with the high cost of petrol, the price of Liquefied Petroleum Gas (LPG), commonly known as cooking gas, has also surged to N1,500 per kilogram.
Suresh Kumar, Managing Director/CEO of NIPCO Plc, expressed optimism that domestic refineries, including the Dangote Refinery, would eventually reduce cooking gas prices. He voiced concerns over the heavy reliance on imports, noting that over 60% of Nigeria’s cooking gas is sourced from abroad.
A market survey conducted in Lagos and Ogun states confirmed the price of cooking gas had peaked at N1,500/kg in some retail outlets by Sunday. In Abuja, the average cost of refilling a 12.5kg cylinder had jumped by 41.6%, reaching N17,000 in various areas.
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For comparison, the same cylinder sold for N12,000 in July and N11,735 in January 2024, showing a sharp upward trend that is causing significant hardship for consumers.
In August, the Minister of State for Petroleum Resources (Gas), Ekperikpe Ekpo, promised to address the rising cost of LPG. He indicated plans to collaborate with regulators and gas producers to seek ways to lower the price. However, the latest market survey reveals that the price has only risen further instead of dropping.
Across the Federal Capital Territory (FCT), Lokogoma saw the price of a 12.5kg cylinder increase to N17,000 from N12,000 just three months ago, marking a 41.6% jump. In other parts like Kubwa, prices ranged between N16,200 and N16,500, while in outlying areas like Bwari, Kurudu, and Jikwoyi, prices hovered around N1,300/kg.
The Commissioner for Environment in Ogun State, Ola Oresanya, has warned that if the LPG price hike persists, many Nigerians may revert to using charcoal for cooking, which could have adverse environmental consequences.
Local Production: The Key to Price Reduction
Speaking at the Nigerian Association of Liquefied Petroleum Gas Marketers’ 2024 National Conference, Suresh Kumar urged the Federal Government to incentivize companies like Chevron to convert more of their propane into butane, which is better suited for domestic use. Currently, less than 40% of Nigeria’s LPG consumption of 1.5 million metric tonnes is produced locally, with the rest being imported.
Kumar highlighted that the government must support increased local production to alleviate the heavy reliance on imports and reduce the influence of foreign exchange volatility and international pricing on the domestic market.
“With the Dangote Refinery and other local refineries sourcing crude oil in local currency, the production of LPG is expected to rise, which should help drive down prices,” he explained.
Infrastructure and Investment Needs
According to Kumar, expanding local production would not only lower prices but also encourage investments in essential infrastructure such as pipelines, storage, and bottling facilities. NIPCO has already invested significantly in LPG infrastructure, increasing the capacity of its Apapa facility from 5,000 metric tonnes to 20,000 metric tonnes over the years.
He emphasized that while LPG is vital for domestic use, compressed natural gas (CNG) will play an essential role in industrial and transportation sectors.
Despite the growth in Nigeria’s LPG market, Kumar noted that the country still has untapped potential, with less than 60% of the population using LPG. He urged stakeholders to invest in capturing and processing flared gas, which could increase domestic supply from the current 1.5 million metric tonnes to 5 million metric tonnes annually.
A Temporary Price Hike
Although the current high LPG prices have hindered consumption growth, Kumar believes that the situation is temporary. He expects market corrections as more players enter the gas processing sector, stabilizing prices in the long run.
He called on the Federal Government to continue supporting local refineries, including the Dangote Refinery, to boost domestic LPG production and make cooking gas more affordable for Nigerians.
“We must encourage domestic production to drive down retail prices and make LPG more accessible to the public,” Kumar concluded.
