BY EMEKA EJERE
The plan of the federal government to deepen domestic consumption of gas through the National Gas Expansion Programme (NGEP), with a target of creating about three million jobs seems to be about to be shattered, even before take-off as many Nigerians are abandoning its use.
Findings show that Liquefied Petroleum Gas (LPG) or cooking gas is now beyond the reach of average Nigerians as many have turned to charcoal or firewood, with the attendant environmental and health implications. Kerosene which used to be an affordable alternative has also hit the roof top.
A kilogramme of cooking gas is now N625 or more, depending on the location, forcing many households and eateries, especially in urban centres to seek alternative means of cooking.
Nigeria is endowed with enormous natural gas resource. However, how to use this resource to develop and transform the nation’s economy and add significant value to the lives of its citizens has remained a major issue for decades.
According to the Department of Petroleum Resources (DPR) –the regulator of activities in the Nigerian oil and gas industry, Nigeria’s proven gas reserves stood at about 206.53 trillion standard cubic feet as of June 2021, implying that the country has more gas than oil. The nation’s unproven gas reserve is still at about 600trillion cubic feet. These numbers no doubt put Nigeria as a major player in the world gas market, ranking as the ninth largest gas producer globally and the number one on the African continent
Although Nigeria prides itself as a major exporter of LNG to the world via the Nigeria LNG Limited, making gas available for domestic use through business-friendly government policies and actions will help a great deal in driving economic diversification and competition.
BusinessHallmark’s survey on Tuesday revealed that the prices of various kilogrammes of LPG have surged more than 50 per cent, with a 12.5kg content selling for N7, 800 or more, rising from N6, 500 in less than a month.
Some of the gas users who spoke to our correspondent during the market survey in Lagos and Akute, a suburb of Ogun State, said the situation had forced scores of poor Nigerians to resort to using charcoal-fuelled stoves to cook.
Mrs. Rose Okoro, a resident of Ojodu in Lagos described as worrisome, the rising cost of cooking gas, which she said had made many go back to use of coal and firewood because kerosene was also expensive.
“With the way things are going, the cost of gas may rise to N1, 000 per kilogram by end of the year,” she predicted.
At Ketu, also in Lagos, Mrs Charity Amos, said many of her neighbours had resorted to the use of charcoal pots because they could no longer afford gas.
Mr. Benard Ojo, an artisan at Akute, said he abandoned his gas cooker for a charcoal stove. “Many of us can’t buy cooking gas anymore; government should do something about it. The price keeps increasing every day.’’
Records of gas price tags indicated that the marketers began to hike the product price from April this year, rising from around N3, 600/12.5kg cylinder to N4, 200.
By May, gas filling plants sold 12.5kg for N4, 700 while it reached N5, 000 in June and N5, 700 in early July. It was learnt that those buying in lower volumes like 3kg, 5kg, 8kg and 10kg, paid over 50 per cent more than they did in March.
Latest report of the National Bureau of Statistics (NBS), had shown that the average price of a 5kg cylinder of cooking gas in August rose by 3.44% from N2,141.59 in July to N2,215.33.
The product sold higher in AkwaIbom at N3, 025.45; Benue at N2, 825.00 and Jigawa at N2, 521.43. The prices were lowest in Abuja at N1, 806.66, Ondo at N1, 840.81 and Lagos at N1, 847.70.
The average price for refilling a 12.5kg cylinder also saw an increase of 2.09% at N4,514.82 in August from N4,422.32 in July 2021 and was more expensive in Abuja (N5,837), Kogi (N5,237) and Ogun (N5,170) but the cheapest in Niger (N4,021), Kebbi (N4,042) and Jigawa (N4,079).
Ironically, this is coming at a time federal government is working towards promoting more use of gas in Nigeria, with the declaration of 2021-2030 as Nigeria’s decade of gas, meaning more demand for the commodity.
In order to make Compressed Natural Gas (CNG) the fuel of choice for transportation and LPG the fuel of choice for domestic cooking, captive power and small industrial complexes, the federal government introduced the NGEP. Under the programme, the Central Bank of Nigeria (CBN) is providing N250 billion loan to help stimulate investment in the gas value chain as part of its efforts to stimulate finance to critical sectors of the economy.
The Gas Expansion Programme particularly targets increased use of cooking gas as a cleaner source of cooking energy for Nigerians.
With power plants facing gas shortages and households contending with unprecedented rise in the price of cooking gas, the CBN intervention is seen as timely in government effort to encourage gas usage.
Speaking recently on the plan of government to boost investment in the sector, Technical Adviser, Gas Business, to the Minister of State for Petroleum Resources, Mrs. Brenda Ataga, explained that the fund serves as a catalyst to grow gas usage in the country.
Ataga said the fund targets indigenous companies with preference given to gender based businesses on the Small and Medium Scale Enterprises (SMEs) side.
She explained: “Because the value chain is quite vast this funding enables the projects from the mid-stream all the way down to the micro-downstream level, we expect that in each of those pockets they would contribute a certain level of jobs.
Also speaking on the fund, the National Chairman of Electricity Consumers Association of Nigeria (ECAN), Michael Chiejine said more focus should be given to gas supply to power plants. He pointed out that increasing electricity generation and distribution is critical to Nigeria’s economic and social growth.
He said, “It is good that the CBN is doing this and we hope that the fund will be properly managed. Gas is the future, we all know this but there has to be strict monitoring especially at the local level to ensure safety for all users.
“Gas retailing has to be the key and the government has to ensure that the prices are within the reach of the average Nigerian. In the past three months, we have seen gas prices skyrocketing, that is not a good sign and won’t encourage people to switch over to the product.”
Why the price hike?
The Nigerian Association of Liquefied Petroleum Gas Marketers, NALPGAM, has attributed the latest rise in the price of cooking gas to federal government’s re-imposition of Value Added Tax (VAT) on imported LPG.
NALPGAM’s Executive Secretary, BasseyEssien, in a press statement seen by Business Hallmark explained that Nigerians may have to pay up to N10,000 in the nearest future to refill 12.5kilogram cylinder of cooking gas.
He stated: “It is unfortunate that the Federal Inland Revenue Service and the Federal Ministry of Finance have gone to resuscitate a product that has been exempted and gazetted from VAT.
“This was gazetted in 2019 and has encouraged domestic gas utilisation. Nigerians are already complaining about the prices of cooking gas across the country, and this would further worsen the situation”.
He cautioned that the initial objective of domestic availability will be defeated if cooking gas goes out of the reach of ordinary Nigerians due to the current increment in prices of the commodity.
He also noted that more than one million metric tonnes of gas were consumed by Nigerians in 2020, with about 60 per cent of the product imported by marketers.
“We import to augment the 350,000MT allocated to the domestic market by the Nigerian LNG Company Limited”, he added.
NALPGAM boss, insisted that charging VAT on LPG would return Nigerians to era of cooking with kerosene stoves and firewood with the attendant health implications.
According to him, the new prices are “based on the price the marketers buy the product from the depots and terminals.”
On his part, the National Chairman of Liquefied Petroleum Gas Retailers Branch of NUPENG, Mr. Chika Umudu, attributed the price hike to the country’s high dependence on imported LPG.
“As the dollar is appreciating against the naira, the price of LPG is increasing,” he said.
He suggested that the Nigerian LNG Limited, which accounts for more than 40 per cent of the LPG supply volumes in the country, should be supplying the domestic market in accordance with the demand, rather than having a fixed quantity per annum.
“People in rural areas and semi-urban areas, who are even the major target of LPG expansion, are beginning to dump their cylinders. It is not a good development.
The Independent Petroleum Marketers Association of Nigeria (IPMAN) had attributed the rising cost of cooking gas to lack of adequate supply.
“How can they be exporting our gas and we are importing it back? The government should let Nigeria LNG Limited supply enough to the domestic market to reduce the cost of gas”, the national operations coordinator of IPMAN, Michael Osatuyi, told a national daily.
“Foreign investors have been saying there is no market here, but we have the market.
However, the marketing manager of NLNG, Austin Ogbogbo, in a response to the claim made by the IPMAN said that the marketers did not have enough infrastructure to take up the gas the company supplied.
He said, “NLNG has grown its capacity from 50,000 metric tonnes per annum to 450,000 metric tonnes per annum of LPG in the past 14 years.
“Nigeria needs 1.2 million metric tonnes per annum, but even the 450,000 we produce cannot be absorbed by the market’s current infrastructure.
“We only operate in the midstream sub sector of the industry so we are only responsible for supplying to the market.
“The downstream players are responsible for the distribution to the end users, and also building the infrastructure to ensure it is done efficiently. It is out of our scope.”
He assured the public that the company would grow its LPG capacity if it confirmed that distributors could take up additional supply.