Cooking gas prices record first drop in 21 months
The average retail price for refilling a 12.5 kg cooking gas cylinder declined by 0.23 percent in February, the first time in almost two years, according to data from the National Bureau of Statistics (NBS).
Data obtained from the NBS shows that cooking gas prices fell last in May 2021, when the product was sold for N4288.95 per 12.5 kg.
According to the NBS, the average retail price declined from N10,277 in January to N10,253 last month. On a year-on-year basis, it rose by 38 percent from N7,447 in February 2022.
Experts say that changes in cooking gas prices can be attributed to changes in crude oil prices, exchange rates, shipping costs, and demand for Liquefied Petroleum Gas (LPG).
“Crude oil prices typically influence domestic LPG prices in the international markets; as the price of crude oil rises, LPG prices often follow suit,” said Olufola Wusu, partner and head of oil and gas at Megathos Law Practice.
“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.”
According to Wusu, while local LPG supply is available in Nigeria, the bulk of LPG used in Nigeria is imported from other countries.
“The reliance of the Nigerian market on multiple “third parties” for logistics to deliver LPG to the final users instead of an LPG pipeline system that can deliver LPG to the end users in their homes or factories has left the market susceptible to the side effects of the laws of demand and supply, occasioned by a surge in seasonal demand and a steady supply of LPG in Nigeria,” he said.
“Nigeria needs to deepen its domestic supply of LPG beyond its reliance on NLNG’s capacity (the proposed auction of offshore oil and gas blocks may be a good omen in this regard).”
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A BusinessDay investigation showed that some households have discovered a slight decline in cooking gas prices by N500 or N1000.
“In my area, the price for refilling a 12.5kg cylinder of cooking gas fell from N10,500 to N10,000,” said Ugochi Chioma, a mother of six that lives around Stepping stone, Satellite Town Lagos. Despite the decline, the cost is still relatively high.”
Despite the slight decline, households still struggle to access the product due to the lack of naira and failed bank transfers.
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.
“Refilling cooking gas is difficult because I live in a rural area where the naira scarcity is worse. When I eventually get to where gas is sold, most retailers request cash rather than transfers, which are still faulty,” said Martha Ogunsanya, a Shimawa, Ogun State resident.
According to Wusu, 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.
“LPG pipeline systems use lower amounts of energy to transport significantly larger volumes of LPG than can be conveyed by truck, rail, or ship,” he said.
According to NBS, Akwa Ibom recorded the highest average retail price for the refilling of a 12.5 kg cylinder of cooking gas with N10,879, followed by Cross River with N10,804 and Anambra with N10,769.
The lowest average price was recorded in Yobe with N9,580, followed by Gombe and Borno with N9,767 and N9,857, respectively.
Analysis by zone showed that the South-South recorded the highest average retail price for refilling a 12.5kg cooking gas cylinder at N10,590, followed by the South-East at N10,479, while the North-East recorded the lowest price at N9,801.
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.