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Nigeria's leading finance and market intelligence news report.

Nigerians stock cooking gas as price heads for N10,000

Some Nigerians are beginning to store large amount of Liquefied Petroleum Gas (LPG) – cooking gas – at home to hedge against prices set to top N10,000 per 12.5kg on the back of a volatile exchange rate and winter in western countries, as the holidays approach.

In an interaction with some consumers in Lagos and Abuja, BusinessDay found that many were now buying larger gas cylinders to store cooking gas in anticipation of higher prices over the holidays.

“I am concerned that prices will rise much higher and one is not sure that product will be available,” Wunmi Bailey, a businesswoman who lives at Ikeja, Lagos, who just filled up a 50kg cylinder of cooking as at the cost of N31,000, said.

Around Kubwa in Abuja, many consumers are appearing at gas stations with several cylinders to buy LPG for storage.

An attendant at Sunrise Gas, an LPG retail outlet in Lagos, told BusinessDay that the prices of gas cylinders had risen over 30 percent within the last two weeks driven by many Nigerians buying extra cylinder to stock up on gas.

“I have also bought two extra cylinders myself because I know the prices will get to N10,000 by December,” he said.

Bassey Essien, executive secretary, National Association of LPG Marketers (NALPGAM), says if the government does not address the recently introduced import charges and VAT, the price of cooking gas may as well reach N10,000 for a 12.5kg cylinder by the end of the year.

Read Also: Here’s why Nigerians may pay more for cooking gas in festive period

“The skyrocketing price of gas is our fear and what we are trying to avoid. Early in the year, a 20 metric ton of gas was selling for below N5 million but today same tonnage sell for N10.2 million.

“As long as there is that supply shortage, the available quantity and the dynamics of supply-demand will keep pushing the price higher,” he said at a virtual interactive session organised by a pan-African forum, Platforms Africa.

According to Essien, the cost of cylinders has been on the gradual rise over the years, and “we have about two-cylinder manufacturing plants in the country and all the elements of production are imported, note the import implications.

“The cylinder ownership structure in the country ensures that owners are in charge of their cylinders. Cylinders expire on the 15th year of usage from the manufacturing date. Because of the high replacement cost, consumers buy what they can afford. This has equally encouraged the proliferation of substandard cylinders in circulation.”

Speaking on the risk involved in storing many gas cylinders at home, Emmanuel Uwandu, an expert and founder of GAS360, a local LPG distribution outlet, said the risks are minimal if they are stored in a well-ventilated area and there are no leaks.

“It is normal practice to store an additional bottle as reserve but the risks are higher when you are storing many cylinders and environment is not well ventilated,” he said.

Uwandu had earlier noted that customers were not supposed to be managing cylinders. All over the world, distribution outlets manage the process, they care for the cylinders, replace worn out ones and monitor for safe use.

There are over 4 million cooking gas cylinders in homes across Nigeria and the government estimates that 1.8 million of them may have exceeded their lifespan but are still used daily. The risk of explosion and building fire increases if defective cylinders are used for storage.

Cooking gas cylinders sold in Nigeria often have a lifespan of 10 to 15 years but many have been used in Europe before being shipped to Nigeria.

Soaring cooking gas prices is set to continue to rise till March next year as winter in Europe will increase their need for heating and more demand for natural gas.

Nigeria imports at least 60 percent of the LPG it needs while the Nigerian Liquefied Natural Gas (NLNG) company fills the remaining capacity. Prices of the commodity have been on the rise and more naira is needed to buy lower volumes due to a weak naira.

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