The price of Liquefied Petroleum Gas (LPG) commonly known as cooking gas has spiked by over 100 percent from the beginning of the year till date.
This spike is as a result of the 7.5 percent tax implemented by the Federal Government on imported LPG.
Several months ago, some dealers were mandated to pay tax for imported commodities. Alongside these imported commodities, the government implemented the VAT on LPG imports about three weeks ago.
Reports from operators revealed that Nigeria imports about 70 percent of the commodity, while the rest is mainly supplied by the Nigeria Liquefied Natural Gas company.
It was also gathered that the cost of a 12.5kg of cooking gas that sold for about N3,500 in December 2020 had jumped to as high as N6,800 in most parts of Abuja. Analysts project that the cost of the 12.5kg might hit the N10,000 threshold by December this year.
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Operators say the development has contributed to the recent rise in the price of ready-made restaurant meals nationwide. They also note that small businesses and homes in rural and semi-urban areas are being forced to revert to firewood and charcoal, as the purchase of cooking gas has plunged in recent months.
Michael Umudu, national chairman, Liquefied Petroleum Gas Retailers Association of Nigeria, listed three factors responsible for the surge in price.
Firstly, about 70 percent of the gas we consume in Nigeria is imported and importers have to contend with the high cost of foreign exchange.
Secondly, there is a rise in the price of petroleum products in the international market and because of that, the cost of LPG has equally gone up. So importers now pay more on imports. And thirdly, the government added VAT on imported LPG about three weeks ago.
He further stated that before the introduction of VAT, foreign exchange and cost of petroleum products in the international market had been the factors causing the rise in LPG price.
“Around November/December last year, 12.5kg was sold at about N3,500, but in July it went up to around N5,500 and when VAT was introduced about three weeks ago, it now escalated to about N6,500 and is still rising.
“The price hike seems to be happening on a daily basis and nobody can tell when it will stop. There has been a lot of appeal to the government to find a way of persuading NLNG to increase its domestic supply so that the product can be affordable,” he added.
“NLNG supplies about 35 percent of the gas we consume locally and that percentage is not adequate. And the gas sold by NLNG is even sold at international price and is priced in dollar not naira,” Umudu said.
When asked about the cost of the commodity in metric tons, Umudu, replied, “20MT is now in the average of about N8 million. And before VAT was introduced, the price of 20MT was around N6.8 million to N7 million, which was the highest price then.”
Also speaking on the issue, the executive secretary, Nigerian Association of Liquefied Petroleum Gas Marketers, Bassey Essien, supported Umudu’s earlier statement that the cost of 12.5kg gas could hit N10,000 in December.
He said: “If by December they (government) don’t take time to address this surge, it (12.5kg) will be N10,000. We are not the one causing this, rather it is the government. We sell what we get.”
On what could be done, he replied, “The volume we produce in Nigeria is just about 40 percent of the total consumption; the rest is imported. And you don’t have a forex window for these people to access to import gas.
In the coming months, Nigerians should expect the trickle-down effect of this price increment to be reflected on the prices of confectionaries during events as well as prices of pastries nation-wide.
Isioma Agu, a wedding planner at Abuja stated that “with this persistent increase in prices of both food items as well as that of the resources required for preparing food items and confectioneries for events; event organisers are most likely going to double their prices before the year runs out”.
“We cannot afford to make losses at the expense of a disorganized government,” she added.
