Price of cooking gas rises 63%, to last longer

Nigerians are facing tough times as average price for refilling a 12.5kg cylinder of Liquefied Petroleum Gas (cooking gas) has risen by 62.8 percent over the past one year. Analysts say it could get worse next year.

According to the October 2021 Cooking Gas Watch report by the National Bureau of Statistics (NBS), the average price of 12.5kg of the commodity increased by 62.8 percent to N6,638.3 in October 2021 from N4,078.7 in October 2020. While on a month-on-month basis it rose marginally by 7.7 percent to N6,164.9.

The report notes that states with the highest average price for refilling 12.5kg cooking gas were Oyo (N7,718.2), Abuja (N7,660.0) and Imo (N7,655.6). While states with the lowest were Borno (N5,133.3), Nassarawa (N5,764) and Niger (N6,000).

According to some LPG distributors, the hike in price is expected to continue into next year.

“The soaring cooking gas prices may continue till March next year, as winter in Europe will increase the demand for natural gas for heating,” Emmanuel Uwandu, founder of GAS360, a local gas distributor, states.

Similarly, Ogboji Sunday, a sale representative at Sungas Company Limited, says it is possible for the price to keep increasing till January based on the current challenges facing the sector.

Nigeria imports more than 60 percent of domestic gas while the Nigerian LNG supplies the rest.

Experts blame the price hike of cooking gas on the dearth of infrastructure, global shortfall in gas supply, inadequate local production, and shortage of Foreign Exchange, devaluation of the naira, logistic hitches and the recent introduction of VAT charges on imported gas by the Federal Government.

Damilola Adewale, a Lagos-based economic analyst, says this situation means tougher times lie ahead for consumers.

“It is unlikely that gas prices will trend downwards in the near term considering inadequate local supply of the commodity, foreign-exchange induced pressure on importation and the fact that petroleum products will remain on the high-side for a while,” Adewale states.

Findings reveal that LPG price, which has increased five times in the last two months, adds to the difficulty consumers, already stretched due to inflation and low incomes, are facing.

Read also: Nigerians grumble as Cooking Gas price keeps rising

In order to cope with the rising cost, some Nigerians are switching to dirtier alternatives like charcoal and firewood, while others have started rationing the use of cooking gas to save cost.

“I alternate between cooking gas and firewood because I have to factor into the business my children’s school fees. The current rising price of cooking gas now allows me to consider it as an option,” Eunice Okon, a fruit seller and resident of Lagos State, said.

She says, “The little I make from my rice and beans sales are channelled into different responsibilities. With N200 firewood, I will prepare food for my customers for two days and channel other money for the needs of my children.”

Similarly, Marian Godei, a mother of five, says before she used to fill her 12.5kg cylinder full but now she just fills it halfway, saying, “I also had to minimise the amount of food that I cook now.”

There are concerns that the price of LPG may jump to N10,000 soon unless urgent steps are taken to increase local production and improve supply to the market.

Recently, Bassey Essien, executive secretary at Nigerian Association of Liquefied Petroleum Gas Marketers, said the re-introduction of Value Added Tax meant most businesses had no option than to increase their prices in order not to run at loss. He warned that Nigerians might soon end up paying more than N10,000 for a 12.5kg of cooking gas.

In September, Mele Kyari, group managing director of the Nigerian National Petroleum Corporation (NNPC), said poor supply of gas was still a major challenge in Nigeria’s domestic market.

“Today, this country is under-supplied with gas. I can tell you that we are having difficulty feeding our network across the country with gas. Every day, it is troublesome to deliver gas. Once your supply is weak, it will affect pricing,” Kyari said.

To solve the problem of galloping prices of domestic LPG, analysts at CSL Stockbrokers advise the government to actively collaborate with the private sector and provide incentives to elicit investors’ participation in the LPG infrastructure that would enhance local production of gas.

“The government, on its part, needs to implement policies aimed at removing existing unfriendly tariffs and taxation of the product and its associated equipment so as to attract the much needed private sector investment,” they say.