There is a sign of relief for consumers as the average price for refilling a 5kg cylinder of Liquefied Petroleum Gas (LPG), popularly known as cooking gas, steadily declines since February this year, a BusinessDay analysis shows.
According to the cooking gas price watch for May 2019 by the National Bureau of Statistics (NBS), the prices declined at an average of 6 percent in the last four months.
Cooking gas in May showed a decline by 2 percent to N2,028 from N2,067.7 in February and a marginal decline by 1 percent month-on-month from N2,046.5 in April.
Stakeholders in the gas industry have attributed the steady decline to the availability of gas and the effort of government in tackling the challenges in the gas sector.
Ayodele Oni, an energy partner at Bloomfield Law Practice, said, “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.
“But now there is a lot of focus on gas by the government. They have been doing a lot of sensitisations, promotions and making sure that the problems, with the terminals are being reduced, so the thermals are now available for gas production.
“At the moment, we don’t expect that it will increase, although it might not dropped substantially but I don’t expect it will increase substantially too, unless something goes wrong in the international market,”
The present administration has been trying to create an enabling environment in a bid to increase domestic consumption of LPG by various homes across the country.
Vice President Yemi Osinbajo recently stated in 2016 that Nigeria spent $1 billion as subsidy on kerosene in 2015, and stressed that this was because of the massive dependence on kerosene and firewood by millions of households in 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,” Osinbajo said at a Domestic Liquefied Petroleum Gas Stakeholders’ Forum in Abuja.
The challenges being faced by the gas sector are production, limited thermals, inadequate finance, poor policy implementation, professional knowledge gaps and low capacity building.
“Typically, the domestic market such as the Nigerian Liquefied National Gas (NLNG) and some other portions of gas are imported. 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 leads to an increase in prices,” an anonymous quote said.
“But what has happen is that so far in the last 12 months, there has been a seamless efficiency in terms of the supply chain. So now you have gases 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.
He also added that there was a push for the domestic supply of NLNG, as it was currently taking shape in the market and some sources of new domestic supply production of LPG were coming forth making the market to react positively to it.
Earlier in August 2018, the Federal Government had agreed to the removal of Value Added Tax (VAT) on locally produced LPG from the NLNG company, as this action would 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.
And 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.