By Teddy Nwanunobi
The Department of Petroleum Resources, DPR, has cautioned that granting import licenses for Liquified Petroleum Gas (LPG), also called cooking gas, will grind down the expected growth in the gas sector.
Nigeria, the DPR Director and Chief Executive Officer, Engr. Sariki Auwalu, noted, has abundant and sweet gas waiting to be explored, adding that the policy direction of the Minister of State for Petroleum Resources, Chief Timipre Sylva, on gas is expected to attract humongous investment that will help in transforming Nigeria’s economy.
Auwalu stated that Nigeria currently produces about 8 billion standard cubic feet (SCF) of gas daily, exporting 3.5 billion SCF of gas and domestic utilisation now standing at 2.8 billion SCF of gas daily, and that what is needed to do at this point is to drive policy to mature the domestic gas market.
Speaking while reviewing implementation of the Nigerian gas transportation network code (NGTNC) that was launched last year, Auwalu said some potential investors are targeting investment in the domestic gas value chain.
He explained that the Master Plan is a guide for the commercial exploitation and management of Nigeria’s gas sector, and aims at growing the Nigerian economy with gas, by pursuing three key strategies to stimulate the multiplier effect of gas in the domestic economy, position Nigeria competitively in high value export markets, and guarantee the long term energy security of Nigeria.
There are reports that those using cooking gas are in for a hard time, as the price of the product keeps going up without any idea of when it would come down.
It is gradually going out of the reach of low income earners, as they could no longer bear the burden of the price of the commodity.
On Monday, the price of the commodity jumped to N7.6 million from about N3.6 million to N4 million per 10 metric tons last year, but from the beginning of this year, the price started increasing.
1000 kilogrammes are equivalent to 1 metric ton, and the ex-depot price of 1 kilogramme is put at N380.
In the last one month the price increased from N7 million to 7.2 million and then 7.3 million, and on Monday, it jumped by N400,000 to N7.6 million.
This is the amount the commodity is taken from the depots to the plants where it is refilled into the 12.5kg cylinders.
The price of 12.5kg is about N6000 on the average at retail outfits in some parts of Lagos plants.
The situation has been attributed to lack of foreign exchange to import gas into the country. The in-county capacity for the companies producing LPG is just about 60 per cent while the remaining 40 per cent is imported.
The situation is being compounded with the introduction of value added tax (VAT) on the commodity.
The Nigeria Liquefied Natural Gas (NLNG) is the most reliable source in-country export of most of the products, as it was initially not to address domestic needs of the country.
The 12.5kg that was selling for N3,500 has also jumped to N6,000, while 3kg that was sold for N900 before has now jumped to about N2,500, and 6kg is being sold for about N4,000, depending on the area where it is being sold.
Government policies on foreign exchange, which has made it difficult to be accessed by importers of cooking gas or LPG, Nigeria’s exchange rate, which has plummeted, different levies introduced by the government, such as Petroleum Products Pricing Regulatory Agency’s (PPPRA) admin charge on LPG, various DPR charges, and the recently introduced VAT, which is to be implemented by the Nigeria Customs Service (NCS) on imported LPG, which payment has been backdated, are big hurdles that are already in motion to castrate the initiative, which is already gaining grounds across the country.
The Special Adviser to the President on LPG, Dayo Adesina, said the government was going to look at the situation.
“The Federal Government is doing something about the issue so as not to allow its efforts to waste, because of the high price of the commodity.
“The government is working assiduously to look for additional sources of LPG in the country to reduce the foreign exchange component of the price,” he said.
On the issue of introduction of VAT, which Nigeria Customs Service backdated its payments, he said that was just brought to the attention of the government then, and that it would address it appropriately.
“We are not self-sufficient, and had to import to augment the supplies from Nigeria Liquefied Natural Gas (NLNG) Limited through import that is why it is affected by Foreign Exchange. I am sure when we are able to find additional sources and there is competition, the price would come down. The NLNG was only able to provide 450,000 tons last year and the consumption of the country has hit over 1 million metric ton per annum. We are not happy that the price of the product has increased,” he said.