Cooking Gas Price: May Go Higher If? Uchendu Warns
An oil and gas expert Engr. Emeka Uchendu has given reasons for the current hike in the price of liquefied petroleum gas, LPG which serves as domestic cooking gas. He explained that Nigeria currently imports a higher percentage of its LPG even though the Nigeria Liquefied Natural Gas company produces large tonnes of the product because the NLNG was designed to sell to the foreign market.
“Nigeria currently imports about 60 percent of the LPG used domestically. In 2007, President Obasanjo gave the NLNG a domestic supply obligation, DSO to supply 40 percent of Nigeria’s LPG local demand. Why only 40 percent, you ask?
Know it today that, NLNG which produces both LNG and LPG, was designed for only exports. The NLNG was never meant to supply to the local market. Thanks to Obasanjo who tried to help the citizens by the 40 percent DSO. Obasanjo also deregulated the sector – not very sure if he is the one that deregulated it but saw other marketers coming into the business.”
Engr. Uchendu who is a staff of one of the reputable oil and gas companies in the Niger Delta asserted that Naira to Dollar exchange rate plays a major role.
“There is a global price benchmark for LPG, the same way it is for oil. So, as Naira is depreciating, the price you will buy LPG as a consumer goes high.
Importers have been lamenting the difficulty in accessing Dollars and Nigeria banks have not been helping matters. Most importers were initially buying from the black market. But now CBN has come out with the recent regulations and these have worsened access to Dollars.”
Engr. Uchendu lamented that the insufficient supply of the product adjusts to the demand and supply curves in terms of price. “Insufficient supply by NLNG and other few private plants even with the 40 percent DSO, NLNG still prefer to export.”
He pointed out that the tax imposed on suppliers by various unions such as the Nigeria Union of Petroleum and Natural Gas Workers (NUPENG), Department of Petroleum Resources (DPR), Petroleum Products Pricing Regulatory Agency (PPPRA) called Off-takers is a limiting factor. He insisted that “Nigerians are the problem of Nigeria.”
Engr. Uchendu agrees that those were not the only problems but remarked those were the few making consumers to buy cooking gas (LPG) between N6,200 to N6,800 for 12.5 kilograms depending on their location.
Nigeria’s gas reserves are put at 206.53 trillion cubic feet, according to the DPR sources in June 2021 and the signing of the PIB into law, yet he hinted that the price could soar higher if care was not taken.