Economy
Nigerians face more hardship over hike in price of gas, diesel
BY EMEKA EJERE
There are strong indications that the current plight of Nigerian households and industries occasioned by high cost of Liquefied Petroleum Gas (LPG), otherwise known as cooking gas and diesel may get worse anytime soon.
Our checks reveal that price of cooking gas has risen by over 100 per cent in the past few months as 12.5kg is currently selling for between N7,500 and N8,000.
Marketers are warning that unless supply shortage leading to persistent increase in the price of the commodity is addressed, 12.5kg could rise to N10,000 before December.
Findings further showed that 12.5kg of cooking gas was sold in Lagos for N3,800 in October 2020, N4,500 in June and July 2021, N6,000 in September, and now N7,500 or N8,000 in Lagos and Ogun states, depending on locations.
In the same vein, the price of diesel has already skyrocketed to N350 per litre, a development that may further worsen plight of local manufacturers and businesses, which largely rely on the product for power generation in the face of erratic power supply in the country.
BusinessHallmark gathered that the skyrocketing oil price, expected to hit $90 per barrel before the end of this year, will also push prices of petroleum products to a record high and worsen the spike in price of diesel and cooking gas.
As President Muhammadu Buhari presented a budget of N16.39 trillion to the joint session of the National Assembly last month, the current global energy crisis would have been a bumper harvest for oil and gas dependent countries like Nigeria, as current price increase already created a windfall of over $1 trillion revenue for international oil companies.
But the lack of local refining capacity meant that import of products (aviation fuel, PMS, diesel, LPG and others) would erode projected gains. The spike in prices of both products are linked directly with the massive depreciation in the value of the naira, as they are dollar denominated.
Across key global economies, energy crisis has worsened the economic devastation caused by COVID-19, as worst hit countries like China and others in Europe prepare for a cascading situation ahead of winter.
Although renewable energy has been on the rise, most analysts have expressed pessimistic view whether the emerging option could enable consumers evade spiking bills.
Experts attribute the price hike of LPG to dearth of infrastructure, global shortfall in gas supply, inadequate local production, shortage of foreign exchange, devaluation of naira and logistic hitches.
Already, the current price hike has triggered the use of kerosene, charcoal, firewood, saw dust among other energy sources whose prices have started rising as well in Lagos and Ogun states.
Some of the consumers told BusinessHallmark that they have found it difficult to cope with the price hike, thereby, alternating between the use of charcoal and kerosene stoves.
In her lamentation, a trader resident in Akute, Ogun State Mrs. Franca said incessant hike in cooking gas price had affected other commodities in the market.
According to her, the situation has gone beyond control among people with low purchasing power, adding that she would simply go back to the use of firewood and kerosene stoves if the price continues to rise.
“If someone like me is lamenting, you can imagine what hundreds of other residents are going through,” she said.
“Many of them have gone back to firewood and charcoal for their domestic cooking. You can see my coal-pot here.”
She believes it is becoming cheaper to cook with charcoal at N200 per bucket of paint than buying 3kg of cooking gas at N2,000 or 12.5kg at N7,500, excluding transportation.
On her part, a resident of Magboro, also in Ogun State, Mrs. Oluwatosin Ajayi said with the increase in the price of cooking gas, she only cooks once in a day and micro-wave the food with electricity in the evening.
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 without considering the health implications because they could no longer afford gas.
A resident of Ogba, Mr. Femi Aliu, said the increase in the price of cooking gas had affected the price of a plate of food sold to customers by food vendors.
A gas retailer in Abule-Egba, Mrs. Pat Okafor, said: “They also called us that the price has increased from the depot. So we don’t have any choice than to jack up the price. It is what we bought that we are selling.”
WAY TO GO
Meanwhile, the Nigerian Association of Liquefied Petroleum Gas Marketers (NALPGAM) has attributed the continuous rise in the price of LPG to inadequate supply of the product into the domestic market and Federal Government’s re-imposition of Value Added Tax (VAT) on imported LPG, among others.
In an interview with Journalists Hangout, a monitored television current affairs programme on Wednesday, NALPGAM’s president Oladapo Olatunbo, reiterated that the price of 12.5kg of cooking gas will get to N10,000 before December if the supply issues are not addressed, and regretted that dealers are beginning to suffer low patronage as more Nigerians can no longer afford gas.
He said: “The only way forward at this point in time is for government to suspend the issue of import duty and VAT on gas importation until when the country attains self-sufficiency.”
Olatunbo acknowledged that while the price may not go back to about N3,500 as the price of gas has gone up internationally, removing these charges will bring the price down to affordable levels.
He speaks further: “Number two is forex. Importers are having challenges accessing forex to bring gas into the country. Gas is an essential commodity and the only decent way of cooking. So federal government should work out a way of ensuring that forex is allocated to those that are importing gas.
“If they (importers) have access to forex, they will not be patronizing the black market. It is the black market they are patronizing that makes the price to be skyrocketing.
“Another problem is the role of middlemen which is making the prices of essential commodities to be going up as pointed out by President Buhari in October.
“Government agencies should intervene by way of more suasion to persuade middlemen so that they do not take undue advantage and continue to cheat Nigerians.”
NALPGAM’s Executive-Secretary, Bassey Essien, had recently noted: “Today the price has risen to N7,500 and N8,000. The skyrocketing price of gas is our fear and what we are trying to avoid.
“Early in the year a 20-metric ton of gas was selling for below N5m but today, the same tonnage sells for N10.2m. As long as there is that supply shortage, the available quantity and the dynamics of supply-demand will keep pushing the price higher.”
Lamenting poor patronage of NALPGAM by customers due to the high price, Essien had said the association was concerned that more Nigerians were being forced to return to coal, sawdust, kerosene, and other dirty fuel as “the price of the cooking gas has suddenly gone up.”
However, the Nigeria LNG Limited has said it has reduced its exports of LPG in a bid to meet the growing demand in the domestic market. The Managing Director and Chief Executive Officer, NLNG, Dr. Philip Mshelbila, disclosed this on Tuesday in Lagos while highlighting the company’s contribution to domestic LPG supply in the country.
Represented by the Manager, Corporate Communications and Public Affairs, Dr. Sophia Horsfall, Mshelbila, who was addressing a conference organised by energy correspondents, noted that in response to calls for NLNG to supply LPG domestically, the company intervened in 2007 to ease the challenges around the availability of LPG. He said the NLNG had since then consistently made the product available in the country.
He said, “The Company has increased its committed volume to the market by consistently reducing its export LPG volumes in satisfaction of domestic demand, increasing domestic provision from 50,000MT in 2007 to 450,000MT from 2021.
“NLNG provides a dedicated vessel for this purpose, LPG Vessel, Alfred Temile. NLNG has taken steps to diversify the supply base of the product by expanding its delivery point from the Lagos Terminals to include a Port Harcourt Terminal to ensure products are not concentrated in one region by infusing flexibility in supply base.”
Ironically, 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.
