Home Business Cooking gas prices are rising for two reasons – Expert

Cooking gas prices are rising for two reasons – Expert

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A review conducted by Nairametrics over the weekend and public holiday revealed that in some areas of the country, cooking gas also known as liquefied petroleum gas (LPG) has risen to as high as N1000 per kilogram.

In the Gwagwalada and Kubwa areas of Abuja, the Federal Capital Territory (FCT), cooking gas refill for 12.5kg can fluctuate between N10,500 and N12,000, the same condition applies in areas like Amuwo-Odofin in in Lagos State.

During an interview with Nairametrics, Dan D. Kunle, an expert in natural gas, elucidated that the escalation in cooking gas prices is a predictable outcome owing to the notable surge in demand for this essential commodity.

It is important to recall that in May 2023, President Tinubu made a significant announcement regarding the removal of petrol subsidies.

Following this development, key stakeholders like the Nigerian Liquefied Petroleum Gas Association (NLPGA) began advocating for more affordable alternatives to empower Nigerians to fuel their generators and vehicles. One prominent suggestion was the conversion to Autogas/LPG, presenting a viable and cost-effective option in contrast to petrol, which had witnessed a considerable rise in its price.

  • This set off a new wave of demand for LPG especially for generators which had been converted to run on both petrol and LPG. “As everyone knows, if there is low production of a highly demanded product, the price will skyrocket,” said Mr. Kunle.

According to him, the increase in the price of LPG (cooking gas) is attributed to two reasons:

  • Low investments in natural gas exploration in the country
  • Production of associated gas which is obtained from crude oil exploration has also reduced drastically due to crude oil theft.

In addition, he emphasized that the insufficiency in gas exploration investments and the pervasive issue of crude oil theft, which directly affects associated gas production, have steered the nation’s attention towards seeking an alternative solution—importing Liquefied Petroleum Gas (LPG).

It is worth noting that LPG imports are subject to fluctuations in international prices, encompassing processing costs and shipping expenses (in dollars), collectively influencing the final cost borne by end consumers.

Furthermore, he shed light on a pertinent concern: despite Nigeria Liquefied Natural Gas (NLNG) Limited committing to supplying LPG to the country under the domestic liquefied petroleum gas (DLPG) scheme, there has been a noticeable decline in gas supply volumes to the company in recent times.

This decrease in supply can be attributed to various factors within the purview of operators, ultimately hindering the company from producing an adequate volume of gas.

He said:

  • “Some of these factors are aging facilities, vandalism acts, and above all, the low appetite of operators to accelerate investments in the sector because upcoming and more profitable oil and gas producers have emerged elsewhere on the continent.”      

Nigeria does not follow through on policies

According to Mr. Kunle, the country is not able to meet its goals on liquefied petroleum gas (cooking gas) availability not just because it cannot attract real investments in the sub-sector but because of the government’s inability to follow through on policies.

He gave an example of the Butanization Policy of Nigeria in the 1980’s, which has since been abandoned by successive governments.

He stated further that the butanization policy under the old NNPC was meant to encourage Nigerians to switch from firewood and charcoal to LPG through depots in Lagos, Calabar, Enugu, Ibadan, Ilorin, Makurdi, Kano, Gombe, and Gusau and was to be supplied from the refineries at Kaduna, Warri, and Port Harcourt.

He said:

  • “The depot at Calabar was later privatized but what happened to the other assets? We are not doing enough to make people switch from dirty fuels to LPG, we are not doing enough to harness the gas resources we have

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