As the festive season draws nearer, Nigerians are cutting back on their holiday spending as the cost of cooking gas, an essential product, continues to rise on the back of poor infrastructure, FX scarcity, and logistic hitches.
The average retail price paid by Nigerians to refill a 12.5 kg Liquefied Petroleum Gas (LPG) also known as cooking gas rose by 39 percent, according to the National Bureau of Statistics (NBS).
Data obtained from NBS show that the average retail price rose from N7308 to N10,181 in November. On a month-on-month basis, it increased by 1.30 percent from N10,051 in October.
The surge in price worsens the cost of living for low-income households as the festive season attracts. It also derails gains in eliminating dirty fuels for cooking as demand for charcoal increases.
According to the Multidimensional Poverty Index (MPI) report by NBS, over half of the 113 million poor Nigerians cook with dung, wood, or charcoal, rather than clean energy.
Some households that discussed with BusinessDay said they plan to mix charcoal and cooking gas during the festive season, while some plan to manage the high cost but cut non-essential expenses to cope.
Rita Adebayo, a fashion designer that lives in Ajah, Lagos said her family will use both charcoal and cooking gas during this festive season.
“From Christmas to New year we are going to cook many meals, mostly with charcoal because of the high cost of cooking gas,” she said. We will use cooking gas, but charcoal is faster and cost-efficient.”
Idu Raphael, a forex trader from Ibadan said this festive season is not going to be fun for him because the price of everything in Nigeria has gone up.
“Apart from the expensive cost of cooking gas, the cost of food and transport will make things tough during this period,” Idu said.
“In my area, cooking gas retailers sell above the actual price. Instead of getting gas for N9500 or N10,000, I refill my 12.5 kg cylinder of gas for N11,000.”
Idu also said the only people that will enjoy this festive season are Nigerians that can afford the high cost of energy bills, food and transport.
Ugonma Eke, a teacher that lives in Ajao Estate, Lagos, said the high cost of cooking gas is part of the factors that will spoil her festive celebration.
“The cost of refilling a 12.5 kg cylinder of cooking gas has doubled from about N5000 last year to N10,000 today,” Eke said.
“On a general note, the effect is worrisome because the salaries of most Nigerians have not increased this year. This has caused a ripple effect as even the prices of food have quadrupled since last year. The only way to cope during this period is to cut down on non-essentials.”
Analysts blame the high price on poor infrastructure, the global shortfall in gas supply, inadequate local production, shortage of foreign exchange, devaluation of the naira and logistic hitches.
Olufola Wusu, partner and head of oil and gas at Megathos Law Practice, said domestic LPG prices are influenced by crude oil prices in the international market.
“As the price of crude oil rises, LPG prices often follow suit,” he said. The currency exchange rate is another factor, as importers require dollars to import LPG.
“The rise in the cost of local and international shipping, and the surge in demand for LPG during a cold winter are also factors affecting the price of LPG.”
Read also: Nigeria’s cost of living crisis dampens Yuletide spirit
Wusu also said the reliance of the Nigerian market on multiple third parties for logistics to deliver LPG to final users instead of an LPG pipeline system has left the market susceptible to the surge in seasonal demand and a steady supply of LPG in Nigeria.
He said Nigeria needs more domestic supply of LPG beyond the reliance on NLNG’s capacity (the proposed auction of offshore oil and gas blocks may be a good omen in this regard).
“There is a need to switch to the piping of LPG directly into the homes and factories of end users. Among the benefits of pipeline transportation of LPG is the efficiency of the process,” he said.
“LPG pipeline systems utilise lower amounts of energy to transport significantly larger volumes of LPG than can be conveyed by truck, rail, or ship.”
According to NBS, Ogun state recorded the highest average retail price for the refilling of a 12.5kg cylinder of cooking gas with N11,458, followed by Benue with N11,150 and Cross River with N11,013.
NBS also said the lowest average price was recorded in Yobe state with N8,900, followed by Sokoto and Katsina with N9,250 and N9,400 respectively.
Analysis by zone showed that the South-West recorded the highest average retail price for refilling a 12.5kg cylinder of cooking gas at N10,56, followed by the South-South with N10,496, while the North-East recorded the lowest price at N9,600.
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