The Sun News

Scarcity: NLNG, gas marketers on collision course over pricing … ‘No, we’ve not increased price’

By Adewale Sanyaolu

Following an acute scarcity of Liquefied Petroleum Gas (LPG), commonly referred to as cooking gas, the Nigerian Liquefied Natural Gas (NLNG) Limited has denied news making the rounds that it has increased the price of LPG.

Rather, the company explained that domestic LPG price is based on an international price index plus 50 percent of the shipping cost of delivering the product to receiving facilities in Apapa, Lagos.

The price of cooking gas has increased by about 53.3 percent in the last two weeks from N3, 200 to about N5,000

A statement by the General Manager, External Relations, NLNG, Mr. Kudo Eresia-Eke, said that the price is invoiced in Naira at the prevailing official interbank exchange rates, contrary to erroneous assertions made in parts of the media.

‘‘The reality of this is that although LPG is produced and consumed locally, the product like crude oil, is an internationally traded commodity with an international price benchmark, open to global demand and supply pressures.

NLNG however softens the impact of price variations by continuing to subsidise the cost of transporting about 40 percent of total domestic market share which it supplies from its production facility on Bonny Island,’’ NLNG said.

But, the President  of the Nigerian Association of LPG Marketers (NALPGAM), Mr. Basil Ogbuanu, told Daily Sun in a recent interview that the practice whereby LPG is priced at an international price index remained a setback for the sector.

Ogbuanu, argued that the practice is not addressed would erode the gains already recorded which is aimed at deepening the usage of LPG.

On the other hand, he said the weak exchange rate of the naira against the dollar has further increased the price of LPG.

‘‘Rather than use the official exchange rate, the black market rate is used for the conversion and this has led to a 20 metric tonne of gas selling for about N5.5 million as against N3.5 million in November 2016. You will also have to consider the cost of diesel to power the generators when the gas get to the plants.

A litre of diesel now sells for N250.All these costs eventually leads to increase in retail price of gas,’’ he lamented. Even if the vessels are allowed to discharge now,the cost of 12.5kg from a reasonable whole sale plant cannot be less than N4,000.So the situation on hand is not that of price hike but increment,’’ he lamented.

On his part, the National Chairman Liquefied Petroleum Gas Retailers (LPGAR) branch of NUPENG, Mr. Chika Michael Umudu, decried the ongoing instability in the supply and pricing of cooking gas across the country.

And to address the issue surrounding incessant LPG scarcity, Umudu appealed to the government to go back to the drawing board and revitalise the 2007 Obasanjo LP Gas policy which helped to generate some improvements in the sector, thereby making the product relatively affordable to the lower stratum of the Nigerian society.

Aside from the above, NLNG further disclosed that recent delays to vessel discharges at the receiving facilities in Apapa, Lagos which are multi-use terminals with berthing priority accorded to vessels discharging other oil products (Petrol, DPK and Diesel), have also led to a temporary supply disruption over the last 2-3 weeks.

For instance,   he said NLNG’s dedicated LPG vessel has been unable to discharge LPG at the Apapa port since 29th December 2016, due to jetty unavailability, resulting in temporary product shortages in the market.

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