Consumers in a Queue at a Cooking Gas Depot in Lagos 

Nigerian Government’s further plans to reduce cooking gas prices as product supply increases

*The National LPG Expansion Implementation Plan, Office of the Nigerian Vice-President, says there are certain initiatives being taken at the moment, which hopefully will see to further drops in gas prices regardless of the international cost of the consumer product

Gbenga Kayode | ConsumerConnect

Sequel to recent hikes in the prices of the product in Nigeria, the Federal Government has disclosed that it is introducing certain measures towards ensuring further reduction in the cost of the Liquefied Petroleum Gas (LPG), popularly known as cooking gas.

ConsumerConnect gathered the government disclosed this Thursday, January 6, 2022, in response to a noticeable drop in the costs of cooking gas recently.

Photo: NGEPNigeria

Mr. Dayo Adesina, Programme Manager, National LPG Expansion Implementation Plan (NGEP), Office of the Nigerian Vice-President, stated: “It is in government’s interest for the price to go down consistently and there are certain initiatives that are being taken at the moment, which hopefully will see to further drops in price regardless of the international cost.”

The Nigerian Government had set a target to double LPG demand to 1.5million tonne in 2020, and reach 5 million tonne/year by 2030 under its LPG expansion and implementation programme in the country.

In regard to any of such initiatives to further reduce cooking gas prices for consumers of the product, Adesina was quoted to have said that “the discussions are still ongoing and there are certain things that you can do to stimulate the market, which will have an effect. One of them also has to do with storage.”

Noticeable reduction in retail prices of LPG

A market survey late 2021 had indicated the average price of 12.5 kg stood at N8,500, with an anxiety the price could rise further to between N9,000 and N10,000 because of then approaching Christmas due to perennial increase in product demand at the time of the year.

However, latest retail market checks revealed the price of 6kg cooking gas has reduced from the recent N4,300 to between N3,800 and N3,900 in some areas in Lagos State as of Monday, January 3, 2022.

Findings also indicated that the price of 12.5kg LPG has dropped from N8,800 to between N8400 and N8200.

Likewise, in some retail outlets, the prices of the consumer product dropped to between N7,800 and N8,000 as of Thursday, January 6, 2022, according to report.

Hitherto, the cost of LPG had kept rising in the last hitting the roof by over 240 percent between January and October 2021.

The development at the time reportedly compelled some LPG consumers to turn to charcoal or firewood, as consumers of the commodity raised the alarm over the persistent hike in its price.

The product price had increased by 240 percent for 12.5kg, moving up from N3,000 to N10,200 within the first 10 months of 2021.

65 Percent imports mostly from US, Algeria, Equatorial Guinea ─NMDRA

The Nigeria Midstream and Downstream Petroleum Regulatory Agency in a report said that about 65 percent of the LPG is imported into Nigeria, while domestic production accounts for 35 percent; hence the cost of the commodity in the global market affects the price locally.

Similarly, Adesina further disclosed that the international price of the LPG had risen very high October 2021, but dipped towards the end of 2021 into January 2022, as this also contributed to the recent drop in the LPG price across the country, The Punch report said.

Recall in its September 2021 LPG report, the Petroleum Products Pricing Regulatory Agency (PPPRA), now known as the Nigeria Midstream and Downstream Petroleum Regulatory Agency, had noted that a bulk of the domestic supply was sourced from the Nigeria Liquefied Natural Gas, while the imports came mostly from the United States (US), Algeria and Equatorial Guinea.

The Programme Manager of National LPG Expansion Implementation Plan also stated: “If you look at the international pricing of the LPG, and that might change, again, because it is not a fixed price; in January last year, it was $250 per tonne.

“It rose to $875 per tonne by the end of October and started dropping by the end of November into December, and came down to around $500 per tonne at some point but went up again in December to $708 per tonne,” the presidential aide noted.

Adesina also noted:  “Now, as of the third of January this year, that figure is $744 per tonne.

“So you can see there is a drop from about $800 around November to $700 in January. The issue here is that the price has been fluctuating.”

He as well stated: “Yes, you have the effects of Customs and the position of the VAT (Value Added Tax) that made people pay tax for what they imported even in 2019 and 2020.

“Of course, some importers stopped importing, but there is a resolution going on to resolve that aspect.”

Government assures consumers of further drop in LPG prices

Meanwhile, the Federal Government has assured Nigerian consumers of its proposal to come up with additional measures for a further reduction in cooking gas prices regardless of the price fluctuation in the international market.

Mr. Michael Umudu, National Chairman, Liquefied Petroleum Gas Retailers Association of Nigeria, while commenting on the development in the gas market in the country, confirmed the recent drop in LPG prices.

Umudu attributed the sizeable drop in the product prices to the increase in supply by the Nigerian National Petroleum Company (NNPC) Limited and Nigerian Liquefied Natural Gas (NLNG) respectively.

According to the Gas Retailers Association’s National Chairman, “many LPG users stopped using the commodity at the time when the price kept increasing and this reduced demand pressure on cooking gas, hence causing a rise in its availability, and then, a gradual drop in price.”

On the Federal Government’s possible removal of VAT on cooking gas imports into Nigeria, Mr. Umudu was quoted to have said that “it (government) has not been enforcing the tax and has remained silent about it, but has not said anything about removing it.

“This also has helped in price reduction.”

NNPC, NLNG efforts at increasing cooking gas supply, reducing product prices

ConsumerConnect had reported Malam Mele Kyari, Group Managing Director and Chief Executive Officer (GMD/CEO) of NNPC Limited, December 2021, said that the company would increase the supply of the LPG in order to reduce prices and make the product  affordable for most consumers.

Malam Kyari said: “Two things are in play. One is the supply in the international market of gas. It moves with the price of every other petroleum product including crude oil and its derivatives.

“Definitely, it is a reflection of what is happening in the international market.

“However, what we are doing is to increase supply and once supply increases, price will come down.”

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