Cooking gas price rises 39% as naira scarcity bites

The average retail price for refilling a 12.5 kg cylinder of cooking gas increased by 38.63 percent in one year, as the scarcity of naira worsened the situation for consumers in Africa’s largest economy.

The National Bureau of Statistics (NBS) revealed that the price increased from N7,413 in January 2022 to N10,277 last month. On a month-on-month basis, it increased by 0.28 percent from N10,249 in December.

Local food vendors and households revealed to our correspondents how they struggle with the high cost of cooking gas and naira scarcity.

“For about five months, I have been struggling with the increasing cost of cooking gas, which has affected sales for my business,” said Ifeoma Okeke, a local food vendor that lives in Satellite Town. However, the naira scarcity has made things worse, as customers have reduced their purchases even after struggling to get food ingredients.”

Okeke says she had to allow customers to pay via transfer to cope. “Initially, I was rejecting transfers because of network issues, but because I sell perishables, I had to allow transfers and create a list for transfers that come in late.”

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The redesign of high-value naira notes sparked a cash crisis across the country. Nigerians are becoming even more frustrated amid the naira scarcity as electronic alternatives to the cashless policy continue to experience hiccups.

While the Central Bank of Nigeria (CBN) continues the push for the policy, alternatives like the point of sale (POS), Unstructured Supplementary Service Data (USSD), and bank apps are failing, leaving many Nigerians stranded.

On Monday, Olayemi Tunde, a resident of Ota, Ogun State, said he had to pay N3000 for N10000 from a Point of Sale (POS) operator in his area to refill his 12.kg cylinder of cooking gas.

“In my area, our only hope is POS operators. Getting access to money via the bank is hell. “So, I had to spend N13,000 on Monday to refill my cooking gas cylinder, which cost N10,000.”

Analysts say the surge in the price of cooking gas is due to poor infrastructure, a global shortfall in gas supply, inadequate local production, a shortage of foreign exchange, devaluation of the naira, and logistical hitches.

“As long as Nigeria imports most of its liquefied petroleum gas (cooking gas), it will be at the mercy of the international market,” said Oreoluwa Owolabi, corporate intelligence lead at GAS360.

“Although the price of LPG has come down a little, it is still relatively expensive compared to the alternative dirty fuels. Oil prices are rising, and this increases the price of LPG. Oil demand has been increasing steadily, thus increasing the price of LPG. The embargo on Russian oil due to the war also led to the price increase.”

Due to the lingering surge in price, some households and small businesses have reverted to dirty fuels. According to the Multidimensional Poverty Index (MPI) report by the NBS, over half of the 113 million poor Nigerians cook with dung, wood, or charcoal rather than clean energy.

Analysts say this situation could threaten efforts to cut down on the use of dirty fuels.

According to NBS, Benue recorded the highest average retail price for the refilling of a 12.5 kg cylinder of cooking gas with N11,261, followed by Cross River with N10,833 and Ebonyi with N10,764.

The lowest average price was recorded in Yobe with N9,550, followed by Taraba and Gombe with N9,845 and N9,850, respectively.

Analysis by zone showed that the South-South recorded the highest average retail price for refilling a 12.5kg cylinder of cooking gas with N10,508, followed by the South-East with N10,489, while the North-East recorded the lowest price with N9,832.

Nigeria needs to smoothen the local distribution process across the country as prices tend to vary as you move further away from the port and distribution point, said Chinedu Onyegbula, an energy sector expert and director at Bullox Resources Limited.