LPG: Nigeria’s Leading Clean Fuel Alternative

-By Yange Ikyaa

With African peers not resting on their oars to grow Liquefied Petroleum Gas (LPG) used as a clean domestic, transportation and industrial fuel, Nigeria is also doubling its efforts to save its natural environment and make its energy economy more sustainable.

A perfect African example is that LPG used in Tanzania is steadily growing in tandem with rising income levels of households, where a total of 107,083 MTs of LPG was imported by marketing companies in FY16/17 as compared to 71,311 MTs of LPG imported the previous year, and representing a 66% increase year-on-year.

In the last quarter of 2018, the Nigerian National Petroleum Corporation (NNPC) announced a national blueprint to aggressively grow local consumption of gas popularly known in the country as cooking gas. The African largest economy had, before that time, expressed its intention to target and control 10 percent share of the global Liquefied Natural Gas (LNG) market as well.

The Group Managing Director of the NNPC, Dr. Maikanti Baru, who unveiled the plans, said his Corporation’s intention is to invest more in making LPG available to Nigerians as a strategic way of discouraging the common use of firewood and other unclean fuels for cooking.

Baru stressed further that it was time to bring LPG closer to the people and at affordable prices, following significant investment which has been made by the Corporation to address the challenges of product deficit.

He listed some of the projects aimed at deepening LPG consumption in the country to include the expansion of NNPC LPG storage facility at Apapa from 4,000mt to 8,000mt in the first phase, and the construction of pipelines to deliver LPG to plants in the hinterland, apart from the development of coastal supply facilities.

“We have also purchased two LPG vessels for export operations through the West African Gas Ltd (WAGL), a joint venture firm, and we have developed a growth strategy plan and are gradually providing LPG kits across NNPC retail outlets”, Baru affirmed.

Following this clearly laid down policy framework, which is supported by investment into gas infrastructure, the Nigerian organized private sector is pushing ahead with different products that promote the use of LPG as a cleaner, cheaper and more efficient fuel while preserving the natural environment.

The Nigerian federal government has said it plans to grow LPG demand from 600,000 tons to 2 million tons by 2025.

In January 2019, the government expressed readiness to implement an effective commercial framework that would halt the export of propane and butane to surrounding countries in a move to boost the supply of LPG to the local market. Butane and propane are the two gases compressed together to form LPG.

Propane, they said, is about 45 percent cheaper than butane, which has characteristic of low pressure and cost.

Considering the age of most cylinders in circulation within Nigeria, the possibility of explosion remains high if propane pressure is exerted on a cylinder.

The acceptable standard globally is that all cylinders must be built to propane pressure specification, but according to the Nigerian industrial standard, which was approved by Standards Organisation of Nigeria (SON), Butane and Propane should be mixed on equal measures of 50 percent each in producing LPG.

Most of the cylinders imported into Nigeria are often sub-standard, and this has endangered the lives of many gas users.

This was corroborated by the findings of the Nigerian Content Development and Monitoring Board (NCDMB), which attributed the influx of sub-standard cylinders into the country to insufficient cylinder production in the country.

The agency has been prompted by this unfortunate reality to initiate a plan to expand local manufacturing of LPG cylinders.

The Ministry of Petroleum Resources has also come up with LPG national strategic policy as a back up to the efforts of SON in riding the country of sub-standard LPG accessories.

NCDMB has gone into partnership with the Bank of Industry (BOI) to produce cylinders capable of meeting the needs of consumers, which is put at three million yearly.

The Department of Petroleum Resources (DPR), has also unveiled plans to release new guidelines to regulate Nigeria’s LPG Industry.

DPR is now embarking on stakeholder engagement in the LPG Industry with a view to fashioning new guidelines on life-threatening issues being taken for granted by operators in the industry.

Zonal Controller, DPR, Lagos, Oluwole Akinyosoye, said the guidelines would spell out truck loading specifications to ensure that operators have the right shut out valves, and are correctly installed.

He warned fuel station operators who are also selling liquefied petroleum gas without government authorization to desist from the act or face the wrath of the law.

According to him, “safety of lives and property is the central theme of oil and gas operations and it is remarkable that safe operations have been the hallmark in the last one year. Talking about safety and operations, you will notice that since the scarcity of kerosene became a permanent feature a couple of years ago, the LPG business has risen to the challenge to provide cooking energy at our homes.”

DPR insists it is illegal to operate an LPG skid even in DPR-approved petrol stations.

“Holding a license to operate a petrol station does not entitle a dealer to set up a gas skid without obtaining the due approvals for the operation from the department, and the dealer must always take care to operate in safe manners even under license.”

As Nigeria has been exporting most of its LPG, it has significantly hampered the domestic market growth, leading to importation of LPG for its own domestic use. By stopping its imports, the nation is setting itself on track to bring LPG prices down and drive market penetration.

The government has also decided to start issuing licenses to selected LPG operators this year to put them at the forefront of the cylinder recirculation module, giving operators the power of cylinder ownership which should quash illegal refilling activities significantly.

The LPG market in Nigeria has been priming itself for tremendous growth and the time is finally at hand, as the country currently consumes about 400,000 to 600,000 metric tonnes of LPG yearly, compared to about 70,000mt a decade ago, which has also encouraged influx of cylinders and allied businesses.

One challenge however is that, with the porous nature of the Nigerian borders, unscrupulous importers have continued to import expired and substandard gas cylinders.

Some of these imported cylinders are used cylinders that are corroded without any indication of expiry dates, yet other companies are pushing ahead with their business of LPG in Nigeria with high levels of standard and efficiency, giving hope that the market could be largely sanitized and made safer and more commercially sustainable.

For instance, MOB Integrated Services Limited recently said it has boosted the supply of LPG in Nigeria by 11,000 metric tonnes.

On January 17, 2019, the company quoted Gbolahan Obanikoro, its Chief Executive Officer, as saying that they have supplied over 25,000 metric tonnes monthly across Sub-Saharan Africa.

Obanikoro said his company has positioned itself as a “front runner” in a bid to boost the supply and availability of cooking gas in the country in fulfilment of the Presidential Liquefied Petroleum Gas (LPG) expansion initiative.

“Nigeria is a sleeping giant with an annual consumption capacity of five million metric tonnes per annum,” Obanikoro said.

“We are currently consuming about 600,000 metric tonnes just a little above 10 per cent of our actual capacity.

Our goal is to continue to push for the adoption and penetration of LPG across the country, ensuring that the product is available or consumers and of course position ourselves to harness the benefits when the market takes a corner and the country is poised to achieving its consumption potential.

In furtherance of the Presidential LPG Expansion Initiative aimed at deepening the usage and fully integrating the product into Nigeria’s energy mix, MT Sahara Gas, the newly built vessel by the company, acquired by the West Africa Gas Limited (WAGL), has delivered an unprecedented 11,000 metric tonnes of LPG to Nigeria in order to boost availability and safe access to the commodity.

WAGL is a Joint Venture of NNPC and Sahara Group that is committed to stabilizing the market and ensuring sustainability of the commodity through strategic deliveries within the sub-region.