One month after FG’s intervention: Households, SMEs still buy cooking gas above N1,100/kg

One month after the federal government promised to crash the cost of Liquefied Petroleum Gas (LPG), also known as cooking gas, households and businesses are still paying high prices for every kilogram of the commodity.  This is because the price has remained on the high side, as investigation by Daily Trust revealed that not much […]

One month after the federal government promised to crash the cost of Liquefied Petroleum Gas (LPG), also known as cooking gas, households and businesses are still paying high prices for every kilogram of the commodity. 

This is because the price has remained on the high side, as investigation by Daily Trust revealed that not much has been achieved in making it affordable.

Recall that on Sunday, November 26, 2023, the Minister of State Petroleum Resources (Gas), Ekperikpe Ekpo, responding to the outcry of Nigerians, announced the federal government’s resolve to immediately bring down the price of gas, make it available and affordable for Nigerians. 

According to Ekpo’s spokesman, Louis Ibah, the intervention followed the rise in the price, which was increasingly becoming beyond the reach of many citizens. 

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Our correspondent reports that the price rose above N1,200 per kg in some states in November last year. Ibah, in the statement, said key challenges identified as responsible for LPG price increase include challenges sourcing forex for imports and insufficient supply to the domestic market by producers. 

When the issue was raised at a recent meeting held at the headquarters of the Nigerian National Petroleum Company Limited (NNPCL), top officials of Chevron Nigeria Limited led by Sansay Narasimi; Nigerian Midstream Downstream Petroleum Regulatory Authority (NMDPRA) led by its Chief Executive Officer, Farouk Ahmed and some NNPCL officials, among others, were in attendance. 

Ekpo expressed the concerns of President Bola Tinubu over the astronomical increase in the price and the attendant hardship on the majority of citizens. 

The minister, who noted that Nigeria is abundantly endowed with gas reserves, said the situation whereby some of the multinational firms were more concerned with gas exports without dedicating huge volumes for the domestic market was unacceptable and should be discouraged. 

“With the exponential increase in the price of LPG, there is the need for the federal government to intervene and I am representing this at this moment,” he had said. 

The minister of state in charge of gas thereafter constituted a committee headed by the NMDPRA boss with a mandate to come up with recommendations on how to boost supplies and crash LPG prices within a week. 

Following the constitution of the committee, the federal government granted value added tax (VAT) and import duty waivers to gas producers as part of measures to reduce the price. 

One of our correspondents, however, learnt that despite the measures, the price has remained on the increase as a 12kg of cooking gas is still selling at between N11,000 and N12, 500 in different parts of Nigeria. 

Years back, millions of middle-income Nigerians used kerosene for cooking at home, but with the removal of subsidy on the commodity in 2016, they were forced to shift preference to cooking gas. 

Beyond households, owners of small and medium scale enterprises (SMEs) such as tailors, grinding machine owners, pastries operators, bakers, restaurateurs, tea and noodle vendors, among others, currently rely heavily on cooking gas to power their businesses. 

The demand for cooking also increased shortly after May 29, 2023, when President Tinubu announced removal of fuel subsidy. 

Days after the removal, many Nigerians who relied on power generating sets removed the carburetors and replaced them with the one that works with cooking gas, which they said was much cheaper compared to petrol. 

This happened in many homes and business premises, markets and malls. 

But those interviewed said the shift in attention to gas, apart from other factors, also made the commodity more expensive. 

Gas is beyond our reach 

Catherine Joseph, a housewife in Sabon Gari, Kano, said cooking gas is now beyond her reach.

“If you are to cook for a family of five three times a day, a 12kg of gas, which is now over N11,000 will not last one month for you. And when you look at the budget you have for the month very well, it is impossible for a middle-income owner to afford gas. We now use charcoal and firewood even though they are also expensive”, she said. 

Mardiyya Sabiu, a restaurateur also in Kano said their hope was dashed when the price of petrol was increased and then the price of gas also went up. 

“We were told that gas is the alternative to petrol but it appears we are still in trouble since the removal of fuel subsidy, which also affected the cost of gas”, she said. 

“I am a heavy user. I have three 12kg cylinders and I refill them after every three days; this is affecting my profit margin”, she said. 

Sanusi Ibrahim, who has a frozen food storage, also in Kano, said when the fuel subsidy was removed, many of them converted their power generating sets to gas. 

“But we are now in a serious mess because the cooking gas is also not affordable. We are pleading with the government to find a lasting solution to the energy crisis so as to help families, businesses and also save the environment”, he said.

Mustapha Aliyu, a tailor at New Market in Jos, said he and his colleagues were in a dilemma. 

“We have a generating set that is fuelling about six shops. We used to buy petrol for it before subsidy removal. And after the removal, it became evident that we could not afford petrol to power it, so we converted it to be using cooking gas, which was less than N10,000 for 12kg. It is unfortunate that gas is increasingly becoming beyond our reach”, he said. 

Lack amidst plenty 

Experts believe that Nigeria has an abundance of gas reserves, which have not been fully tapped. 

They stressed that with clear policy direction and enforcement, gas could conveniently serve the needs of the citizens at local and industrial scale.  They also said it will also help in bringing down cost of living and help biodiversity. 

According to authorities, the associated gas reserve of Nigeria is 102.32 trillion cubic feet, while the non-associated gas reserve is 106.51 trillion. 

In retrospect, the federal government had declared the year 2020, as the year of gas with a view to leverage on the huge reserve for domestic, industrial and energy consumption. During the Buhari administration, the Gas Aggregation Company of Nigeria (GACN) was established to drive the growth of natural gas utilisation in the domestic market. Originally incorporated as a private company, the GACN is to serve a crucial role in implementing the Domestic Gas Delivery Obligation under the Petroleum Industry Act, 2021. 

With over a decade of experience, the GACN is expected to act as the Strategic Aggregator, processing gas buyer requests, managing gas allocation, facilitating Gas Sale transactions, and overseeing escrow accounts for gas sellers. 

Today, little is being heard of this body, whose headquarters is located in Abuja. 

In recent times, the price of cooking gas per kilogram hover around N900 and N1,200, from N600 and N800, making it increasingly difficult for many households and SMEs to use it. 

This has precipitated tree felling by wood mongers, who sell to families, bakeries and businesses. 

Experts say the development is in clear contradiction with the move to address global warming, desert encroachment and other factors associated with environmental degradation like gas flaring, which Nigeria had signed many pacts to implement. 

For instance, even though he did not deliver his speech, President Tinubu, was billed to deliver a national statement, highlighting Nigeria’s stance on various thematic issues, including renewable energy and climate financing at the World Leaders’ Summit (COP28), which took place on December 1 and 2, 2023. 

But during COP26, Nigeria committed to achieve net-zero by 2060, and barely a week after the conference, the then President, Muhammadu Buhari signed into law the Climate Change Act, which was passed by the National Assembly in October 2021. 

It was aimed at reducing, among others, forest depletion and using sustainable energy by converting gas flaring to other purposes to save the environment.  

We’re helpless, say dealers 

In Kano, a major dealer, Ultimate Gas, is selling cooking gas at N960 per kg at its Sharada depot, and therefore, 2kg is sold at N1, 920, while 6kg and 12kg are sold at N5,760 and N11,520, respectively. 

On why the price remained high despite the government’s promise to crash gas prices in the country, one of the officials at the facility asked our reporter to come after the holidays to get a reaction. 

But during a visit on Wednesday, the man was said to be not around while those our reporter met delivering services said they were not aware of any commitment. 

Another major dealer, AA Rano is selling gas at N926 per kg 

In Ilorin, most gas stations are selling gas at between N950 and N1,050 per kg, while other retail outlets sell it at between N1,100 and N1,150 per kg. 

In Abuja, the price is N1,100 per kg at retail outlets on Wednesday, even as those in charge say they purchased it at between N850 to N900. 

In Lagos, it was also sold at N950 at some stations while others sold it at N1,100. At a filling station in Ile Epo, along the Lagos-Abeokuta Expressway, our correspondent noticed a long queue of customers who wanted to refill their cylinders. At the filling station, a kilogram is sold for N1,100. 

Other factors 

It was also learnt that there has been a supply disruption in recent times as many producers were not getting enough gas for production. 

This, sources say, is also responsible for the high cost because the demand is more than the supply. 

Speaking with Daily Trust, President of Nigerian Association of Liquefied Petroleum Gas Marketers (NALGAM), Oladapo Olatunbosun, who had earlier raised an alarm that gas might hit N1,500 per kg by December, said the intervention of President Tinubu saved the day. He stated that by now, the price of cooking gas would have risen to N1,500 if not for their lamentations, and the intervention of the president. 

He said, “Sometime ago, I released a press statement that the price of gas by December will go to N1,500 per Kg if the federal government did not do something. Then, I called the attention of you people (the media) to the rogue cabal about the price not coming down. 

“All these issues were put down and the president immediately approved the waiver of VAT. He also approved that existing promissory notes on VAT should be cancelled and also approved that import duty should be waived on all accessories they use. If all these instructions were carried out, it will certainly lead to lower cost of operation and it will enhance expansion and cooking gas price is expected to fall. 

“The president has done his own part. He has truly shown that he wants the price to go down and he has given orders and it is left for other stakeholders to do their part”, he said. 

When contacted for further reactions on the latest developments, the media aide to the Minister of State for Gas, Mr. Iba said with the palliative government provided, prices are expected to come down in due course. 

‘Crude oil stability key to gas production, sufficiency’ 

Another stakeholder within the value chain who spoke on the condition of anonymity said the major challenge is the issue of vandalism. 

“This is another thing we are battling with because the gas that we have is associated with petrol. Associated gas, in the sense that in the process of getting crude oil, gas comes out of it, water comes out of it, condensation also comes out of it. “So, the gas that we are using, the NLNG and other producers are dedicating to the domestic market, is associated with crude oil production. So, they call it associated gas. Now, the challenge is that the massive vandalism of oil pipelines is affecting the volume of not just crude oil but gas,” he stated. 

He, however, said in a deregulated market, the only thing that can be done is to provide palliatives and incentives to the producers, which the government has done.