Seamless availability, efficiency of gas and government intervention in tackling the bottlenecks in the gas sector lowered the average price for the refilling of a 5kg cylinder for Liquefied Petroleum Gas (Cooking Gas) for four straight months to June 2019.
Average price of cooking gas fell marginally 1.61 percent to N1, 995.4, according to figures from National Bureau of Statistics.
An expert in the gas sector who wishes to be anonymous said that there is a push by the government for the domestic supply of Nigerian Liquefied National gas (NLNG), as it is currently taking shape in the market.
“What has happen is that in the last 12 months, there has been a seamless efficiency of gas in terms of the supply chain. So now you have gas coming from NLNG and other sources being stored on time and made available to the domestic market, transported and shipped to consumers,” the anonymous person further said.
It is believed that in the past, sometimes gas products from NLNG and other sources were hoarded because of limited storage capacity at the thermals. When people hoard the products they created scarcity and panic in the market which raises price.
Other challenges confronting the gas sector include production, limited thermals, inadequate finance, poor policy implementation, professional knowledge gaps and low capacity building.
The present administration has been intensifying its efforts in reducing the massive dependence of kerosene for cooking activities by creating an enabling in a bid to increase domestic consumption of LPG by various homes across the country. “The government had decided to unlock the domestic LPG value chain as this was one policy that the current administration was passionate about since Nigeria had one of the largest gas reserves in the world,” Yemi Osinbajo, Vice-President of Nigeria said at a Domestic Liquefied Petroleum Gas Stakeholders’ Forum in Abuja in 2016.
Also, earlier in August 2018, the Federal Government had agreed to the removal of Value Added Tax (VAT) on locally produced LPG from the Nigeria Liquefied Natural Gas company (NLNG). This action will reduce the cost of locally produced LPG, making it more competitive against imported ones and also encourage investors to go into the manufacture of LPG.
The VAT imposed on the LPG from the Nigeria LNG has made the product more expensive.
Ayodele Oni an energy partner at Bloomfield Law Practice, maintained that government is exerting lot of efforts to resolve thermals crises, which has paid off as thermal are now available for gas production.
“The gas is more available that is why the price has been dropping. Before people used to hoard it thereby creating artificial scarcity and there were issues in the port as there was only one functional terminal then,” Oni further added.
Ayorinde Akinloye, a consumer goods analyst at Lagos-based CSL Stockbrokers in his own opinion said thatgas prices have maintained a steady downtrend over the past 4 months particularly in April and May when there was a significant decline in oil prices. “LPG being a derivative of crude oil is also impacted by movements in oil prices, thus the price dip of May and June fed into lower LPG prices,” says Akinloye.
It seems the government implemented the action as the Nigerian Association of Liquefied Petroleum Gas Marketers, (NALPGAM) in May 2019, commended the government for the removal.
BUNMI BAILEY
