• Friday, July 12, 2024
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BusinessDay

Rising poverty slows Nigeria’s voyage to clean cooking

Between those who think climate change is a myth and others who simply cannot connect the dots between environmental pollution and cooking gas, there is a vast majority who are just too poor to care.

The poor do not really concern themselves with the fewer pollutants from a more environmentally friendly option of cooking gas; they wake up each day preoccupied with thoughts of survival.

Behind the indifference of most Nigerians to environmental pollution is soaring inflation, most especially food inflation.

With a population of over 200 million people, Nigeria seems like a good destination for business as it has a large market. The problem with that is that almost half of the population is either too poor to afford essential goods and services or can now afford less of their usual consumption basket.

For Tosin Ogunubi, the single mom working as a tailor in Lagos, her budget was already stretched thin. She said every penny counted, and the thought of buying N1,300 per kilogramme of cooking gas felt like a distant dream.

“The price keeps going up,” Ogunubi said, her voice laced with frustration. “The cost of refilling a 6-kg gas tank has more than doubled in recent months.”

Mary Uka, a 41-year-old restaurateur who specialises in making fufu, a local delicacy made from cassava, expressed her wish to stop using firewood and charcoal but was constrained by finances.

“Cooking gas costs too much, my dear,” she said. “I use firewood for my canteen business and charcoal at home for household cooking.”

Like Ogunubi, Uka made use of cooking gas. The sporadic increase in the price of domestic gas has since pushed her to the traditional cooking method, with its attendant havoc on her eyes and lungs.

“I am not as old as I look, but cooking has done this.” Uka sighed.

The Uka story is not unique. Across Nigeria, millions of families are grappling with the rising cost of liquefied petroleum gas (LPG), commonly known as cooking gas.

Nigerians are feeling the heat, not just from their stoves but from their wallets, as the price of LPG has skyrocketed to N1,300 per kilogramme, according to findings by BusinessDay.

Read also: FG suspends exportation of cooking gas in bid to tame rising prices

“Street food vendors, who depend on gas for their mobile kitchens, are facing reduced profits and difficult choices.”

This sharp increase, up from less than N500 in 2018, has sent shockwaves through households nationwide, adding another layer of burden to an already strained population.

“How can we cook?” lamented Tosin Adelakun, a Lagos resident juggling multiple jobs to support her family. “Everything is going up, but our salaries stay the same. Now even cooking basic meals is becoming a luxury.”

The price hike isn’t just a pinch; it’s a punch to the gut for many Nigerians who rely on LPG for their daily cooking needs.

Street food vendors, who depend on gas for their mobile kitchens, are facing reduced profits and difficult choices.

“We either raise prices and risk losing customers or cut corners on portion sizes, which hurts everyone,” said Peace Okey, who sells cooked noodles at Oshodi, Lagos.

Rising cooking gas prices

A survey by BusinessDay over the weekend in Lagos indicated that cooking gas sold for between N1,150 and N1,350 per kg, and between N1,250 and N1,350 in some areas in Ogun State.

Miss Damilola Abiodun said she bought one kilogramme for N1,300 at Jakande Isolo. Also, at Oke Aro, Lagos-Ogun boundary community, it was sold at N1,300, up from N1,150.

A Lagos resident, Rasheed Ayodeji, said the rising price of cooking gas had increased the cost of living.

In Magboro, a community on the outskirts of Lagos, residents said they were already seeking alternatives on account of increasing prices as retail outlets were selling a kilogramme of cooking gas for between N1,350 and N1,450, depending on the location.

A.A. Rano, a major gas dealer in Ijegun, was selling at N1,280 per kilogramme when our reporter visited, while Ardova, also a major dealer, was selling at N1,300 per kilogramme.

A 12 kg cylinder was refilled with N17,000 and a 6 kg cylinder with N8,500 at Conoil, a retail outlet on Oshodi Road.

In Ilorin, Kwara State, residents filled a 12.5-kg gas cylinder with N16,875 from the N13, 000 it was sold for last month.

Data gleaned from the National Bureau of Statistics (NBS) revealed that the average retail price for refilling a 12.5-kg cylinder of cooking gas increased by 5.77 percent between February and March 2024.

“The average retail price for refilling a 12.5 kg cylinder of cooking gas increased by 5.77 percent on a month-on-month basis from N15,060.38 in February 2024 to N15,929.04 in March 2024. On a year-on-year basis, this rose by 55.22 percent from N10,262.56 in March 2023,” NBS said in its latest report.

On state profile analysis, Sokoto recorded the highest average retail price for refilling a 12.5 kg cooking gas with N17,833.33, followed by Osun with N17,588.46, Anambra with N17,417.65, Ebonyi with 17,214.29, and Bayelsa with 17,165.

Conversely, the lowest average price was recorded in Katsina at N12,400.00, followed by Kebbi at N13,137.50, Bauchi at N14,484.25, Kaduna at N14,753.13, and Borno at N14,863.64.

Analysis by zone showed that the South-South recorded the highest average retail price for refilling a 12.5 kg cylinder of cooking gas with N16,859.85, followed by the South-East with N16,734.87, while the North-East recorded the lowest price with N14,943.48.

Rising poverty

A report from the World Bank titled ‘Turning the Corner: From Reforms and Renewed Hope to Results’ sheds light on a concerning reality in the clean cooking sector.

According to the World Bank, Nigeria’s poverty rate rose from 40 percent in 2018 to 46 percent in 2023, as the number of poor people increased from 79 million to 104 million.

The report noted that more people have fallen below the poverty line due to sluggish growth and rising inflation.

“Sluggish growth and rising inflation have increased poverty from 40 percent in 2018 to 46 percent in 2023, pushing an additional 24 million people below the national poverty line,” the World Bank said.

The report said the number of poor people in urban areas—more exposed to inflation—increased from 13 million to 20 million, while the number of poor people in rural areas rose to 84 million from 67 million within the same period.

The World Bank said the increase in the poverty rate will be undone by the recent reforms of President Bola Tinubu from 2024 onward, reversing the rise to 44 percent in 2026.

“In the medium term, the reforms will reverse this trend through higher growth and lower inflation, but to a limited extent, with poverty rates decreasing from 46 percent in 2024 to 44 percent in 2026,” part of the report said.

Read also: Plateau residents groan as cooking gas hits N1,300 per kilogram

Experts take

Aisha Mohammed, an energy analyst at the Lagos-based Centre for Development Studies, explained that rising prices of cooking gas are bringing families back to the era of firewood and charcoal.

Speaking on women’s health, Mohammed said respiratory diseases could stem from inhaling smoke from charcoal and firewood.

“These methods are a source of air pollution, which can cause serious health issues. Overexposure to the smoke also leads to a disease called chronic obstructive pulmonary disease, which is very endemic to women,’’ she said.

Mohammed added that the Nigerian government should prioritise making clean energy accessible and cost-competitive to procure its acceptance by the people in low-income communities.

Chinedu Onyeka, an energy sector expert familiar with climate change, said the transition back to the traditional method of cooking would increase deforestation.

He said the increase in LPG’s price is connected to the nation’s economic downturn.

“There is extensive research demonstrating the significant impact of traditional cooking methods on women and children. These methods contribute to deforestation and air pollution, particularly through the emission of smoke.”

Muhammad noted that women’s transition to traditional cooking was a setback in Nigeria’s transition plan to energy, especially in the area of clean cooking.

“The Nigerian government and international development partners must find avenues for cleaning cooking infrastructure to be subsidised so that rural communities, mostly affected, can be able to afford it,” he explained.

Olatunbosun Oladapo, the President of the Nigerian Association of Liquefied Petroleum Gas Marketers (NALPGAM), declined to disclose to BusinessDay the specific prices his members are encountering at the source.

“In the current situation, I can verify that the cost of cooking gas has risen,” said Oladapo. “The situation is very unfortunate because prices are rising and Nigerian consumers are struggling.”

Dan Kunle, an expert in natural gas, elucidated that the escalation in cooking gas prices is a predictable outcome owing to the notable surge in demand for this essential commodity.

“The insufficiency in gas exploration investments and the pervasive issue of crude oil theft, which directly affects associated gas production, have steered the nation’s attention towards seeking an alternative solution—importing liquefied petroleum gas (LPG),” Kunle said.

Other industry operators blamed the fast-eroding value of the naira and the exchange rate fluctuation for the sharp rise in the cost, while the operating cost of businesses keeps rising with the exchange rate.

Adeola Adenikinju, a professor of economics and president of the Nigerian Economic Society, said, “The current inflationary pressure and skyrocketing prices of imported consumables have been exacerbated by the Naira exchange rate to the dollar, making some of these imported items unaffordable by the masses.”.

Adenikinju asked the government to also extend waivers to end users’ equipment like burners and cylinders to facilitate the transition to LPG.

“But the overall objective should be to promote self-sufficiency in LPG consumption and even for exports. The current situation in the energy sector, where we are net importers of refined products, should not be normalised. Once we can meet local demand, the government can reinstate the VAT and customs duty on imported LPG,” he noted.

Read also: FG eyes measure to tame rising cooking gas prices

VAT on cooking gas

Nigeria’s Ministry of Finance, in a letter dated November 28, 2023, said the President Bola Tinubu-led government aims to bring down the cost of cooking gas across the country with the removal of VAT and customs duty on the product.

The letter partly reads: “In line with His Excellency, President Bola Tinubu’s commitment to improving the investment climate in Nigeria, increasing the supply of LPG to meet local demand, reducing market prices, and promoting clean cooking practices, I hereby affirm Presidential Directive dated July 29, 2022, with reference number PRES/88/MPR/99.

“Accordingly, the importation of LPG utilising HS Codes 2711.12.00.00, 2711.13.00.00, and 2711.19.00.00 is exempt from import duty and value-added tax. Consequently, the importation of LPG shall incur a 0 percent duty rate and a 0 percent VAT rate, effective immediately.”

Impact of FX

Although Nigeria boasts over 202 trillion cbf of natural gas reserves, which puts her among the top ten countries with the largest gas reserves in the world, low investment has resulted in her being an importer of LPG.

For Nkechi Obi, the group managing director of Techno Oil Group, the price of LPG can only drop if the naira appreciates.

“The Nigeria Liquefied Natural Gas Limited. (NLNG) is today the only local supplier to the domestic market. The demand for LPG for domestic use has increased. The NLNG cannot meet 100 percent local demand,” Obi told the News Agency of Nigeria.

“They are able to meet 50 percent. The other LPG in the market is import, and its pricing is relative to foreign exchange volatility,’’ she said.

BusinessDay reports that the Federal Government recently said it was interacting with the critical sectors to halt the exportation of LPG as part of measures to cut its rising cost.

Ekperikpe Ekpo, minister of state for petroleum resources (gas), said that all the LPG produced in the country would be domesticated to crash its prices.

Reacting to this, Obi said that the order might be difficult to achieve because the International Oil Companies (IOCs) might have had agreements and clauses entered into with the Federal Government that may be almost impossible for them to change.

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