Cooking gas prices in Nigeria are seen rising further as Russia’s decision to turn off the supply of natural gas to some European countries has triggered a price surge in Europe.
Russian energy giant Gazprom has suspended gas supplies to Poland and Bulgaria, saying they have failed to pay for their energy in the Russian currency ruble, according to foreign media reports.
The move, which took effect from April 27, is seen as a major escalation in the standoff between Russia and Europe over energy supplies since the invasion of Ukraine.
Prices for natural gas futures in Europe jumped by more than 23 percent as trading began last Wednesday morning to $6.94 after Russia’s state-run Gazprom told Poland and Bulgaria it had cut supplies of the fuel.
As prices rise in the international market, Nigeria, which relies on imports to meet about half of its cooking gas needs, will see a sharp increase in the price of the commodity. The price of Liquefied Petroleum Gas (LPG), also known as cooking gas, has surged above 60 percent in recent times along with the rising exchange rate.
“We have seen the energy crisis in the country, along with the rise in commodity prices, some of which have to do with what is happening in Ukraine and Russia,” Felix Ekundayo, vice-president of Nigeria LPG Association, said.
Data obtained from the National Bureau of Statistics (NBS) showed that Ekiti, Ebonyi, Imo, Lagos, Abia, Delta, Oyo, Niger, Rivers, Gombe, Kaduna, and Ondo states have been hit the most by the rising price of LPG across Nigeria’s 36 states.
To refill a 12.5 kg cooking gas cylinder, consumers have to pay as much as N8,750 as against N7,500 paid earlier in March, findings by BusinessDay showed.
BusinessDay had reported that the rising cost of cooking gas was negatively affecting families and food vendors, who expressed difficulty in coping with the soaring prices.
Due to the constant rise in the price of cooking gas, many people are shifting to coal, sawdust and other dirty fuels, which negatively affect human health.
These options also contribute to global warming, as solid fuel burning releases large amounts of greenhouse gas into the atmosphere.
This is despite the launch of the ‘Decade of Gas’ initiative by President Muhammadu Buhari in 2021 to ensure the country’s transition to cleaner energy.
The inability of marketers to access foreign exchange and the introduction of 7.5 percent Value Added Tax (VAT) on gas products are major factors responsible for the incessant increase in the price of cooking gas, according to Bassey Essien, executive secretary of the Nigerian Association of LPG Marketers.
Essien said the Nigerian government is “not sincere” about its efforts regarding LPG. The implementation of VAT on gas products, which was initially stopped in 2018 to increase investment in the sector, contradicts the government’s claim about making LPG accessible and affordable.
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Aside from these, there are other deeper issues affecting cooking gas prices, such as the over-reliance on imports to meet local demand and the international pricing model adopted by the Nigeria Liquefied Natural Gas Limited.
However, the conflict in Europe does not seem to be going away anytime soon. Vladimir Putin, Russian President had announced in mid-March that in future he would only sell Russian gas to “unfriendly” states who were willing to pay in ruble.
Putin justified the decision on the basis that Western countries had frozen the foreign exchange reserves of the Bank of Russia in a violation of the norms of international law.
In response, Ursula von der Leyen, the president of the European Commission, described the move as “yet another attempt by Russia to use gas as an instrument of blackmail.”
“This is unjustified and unacceptable,” Von der Leyen said in a statement on Wednesday. “And it shows once again the unreliability of Russia as a gas supplier.”
Poland announced last Thursday that it was abandoning Russian gas as Europe steps up efforts in search of alternatives.
