Rising cooking gas prices threaten efforts to cut dirty fuels
The average retail price paid by Nigerians to refill a 12.5kg cylinder of Liquefied Petroleum Gas (LPG) also known as cooking gas has risen by 39.78 percent in a month, a situation that could threaten efforts to cut down the use of dirty fuels charcoal, wood and dung surges, analysts say.
Data obtained from NBS shows that the price rose from N7,332 in December 2021 to N10,249 last month. On a month-on-month basis, the average retail price rose by 0.67 percent from N10,181 in November.
Some households and small businesses have reverted to dirty fuels. 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.
Akuboh Benjamin, a resident at Life Camp, Abuja, told BusinessDay that he now uses firewood for cooking large meals to cope with the high cost of gas.
“We use our 6kg gas cooker for things like warming soup and making spaghetti. However, we usually use firewood for cooking large meals,” Benjamin said.
“In Abuja, we buy our firewood from construction sites because it is cheaper than buying it from the market. You can get a full wheelbarrow of firewood for N4000.”
Rita Adebayo, a fashion designer that lives in Ajah, Lagos told our correspondents that her family has been using charcoal and cooking gas since the festive season.
“From Christmas to date, we have been cooking our meals, mostly with charcoal because of the high cost of cooking gas,” Rita said. We use cooking gas, but charcoal is faster and cost-efficient.”
According to a report by the Food and Agriculture Organisation (FAO) of the United Nation, over 40 million Nigerians are engaged directly in fuelwood collection and charcoal production.
An additional 200,000 people – mostly also full-time – provided transport services for retail and wholesale trade in the fuelwood and charcoal production in the country, the report said.
Analysts blame the high price on poor infrastructure, the global shortfall in gas supply, inadequate local production, shortage of foreign exchange, the effects of the international market, devaluation of the naira and logistic hitches.
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“The surge in the price of cooking gas has affected the plan of eliminating dirty fuels. As long as Nigeria imports most of her LPG, it would 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.”
According to Oreoluwa, oil prices are rising, and this increases the price of LPG. Oil demand has been increasing steadily, thus increasing the price of LPG. The embargos on Russian oil due to the war are also leading to the price increase.
For Olufola Wusu, partner and head of oil and gas at Megathos Law Practice, 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.”
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.”