The cost of Liquefied Petroleum Gas (LPG), popularly known as cooking gas, has risen by more than 60 per cent between December 2020 and July this year.
The price now goes as high as N500 per kilogramme, forcing many Nigerians to adopt charcoal, kerosene and firewood as alternative fuels, amid the biting economic situation in the country.
According to The PUNCH, the price of 20 metric tonnes of LPG, which was sold to marketers in the country for N5.5m in January, is now N7.2m as of Thursday, July 22, 2021.
Tekedia Mini-MBA edition 14 (June 3 – Sept 2, 2024) begins registrations; get massive discounts with early registration here.
Tekedia AI in Business Masterclass opens registrations here.
Join Tekedia Capital Syndicate and invest in Africa’s finest startups here.
In Nigeria, biomass is the major energy source, contributing about 78 per cent of Nigeria’s primary energy supply. According to the International Centre for Energy and Environmental Development (ICEED), over 70 per cent of households in Nigeria use firewood as a source of cooking energy, a development that has led to deforestation, climate change and caused the death of over 93, 000 Nigerians yearly.
This rooted culture of using firewood, sawdust and charcoal as cooking energy sources over LPG that is cleaner and safer, is likely going to continue if the current high price of the product is not addressed.
In its Petroleum Product Import and consumption report, the National Bureau of Statistics (NBS) said the country imported 5.6 billion litres of petrol in Q2 and 5.09 billion litres in Q3 2019 . The bureau stated that the country imported 354.7 million litres of Liquefied Petroleum Gas (LNG) in Q2 and 429.38 million litres in Q3 2019.
Further breakdown of the report showed that the country consumed 4.9 billion litres of petrol in Q3 2019, compared to the 5.18 billion litres consumed in Q2, which indicated a decrease of 1.09 billion litres in consumption in 3 months. The volume of petrol imported into the country in September in the year under review, stood at 1.46 billion litres, dropping from 1.64 billion litres in August and 1.99 billion litres in July 2019. The report also showed that the importation of Petrol reduced by 9.13 percent, while the importation of LPG (Cooking Gas) increased by 21 percent.
The continuous increase in the price of LPG is not unconnected with the country’s overreliance on importation of the product and the demand for scarce foreign exchange by marketers to import.
The Central Bank of Nigeria (CBN) in May, adopted the NAFEX exchange rate of N410.25 per dollar as its official exchange rate.
As a result of the devaluation of the naira, marketers now spend what they used in buying 40 metric tonnes some months ago to get 20 metric tonnes.
In recent years, the Federal Government has initiated a number of actions to reaffirm its commitment to ending the practice of gas flaring in the country’s oil fields. As part of its commitment, the government ratified the Paris Climate Change Agreement and is a signatory to the Global Gas Flaring Partnership (GGFR) principles for global flare-out by 2030. These efforts have led to increase in domestic usage of gas in the country.
In January this year, the Petroleum Products Pricing Regulatory Agency (PPPRA) in a statement said the country’s domestic consumption of LPG) exceeded one million Metric Tonnes (MT) in 2020.
“Nigeria consumed 840,594.37 MT LPG in 2019, indicating an increase of 60.5 per cent over 635,452.061MT recorded in 2018.
“This steady and sustained pattern of growth culminating in the over one million metric tonnes of LPG domestic consumption milestone in 2020 has placed the country 1st in West Africa and one of the leading LPG consuming nations on the continent.
“With this laudable feat, the country is on track to meet the five million MT by 2022 target, set in the Nigeria Gas Policy (NGP) of 2017,” the agency said in a statement signed by its Executive Secretary, Abdulkadir Saidu.
As part of the solutions to the current hike in the price of the product, the Federal Government needs to develop a workable framework with the Nigeria Liquefied Natural Gas (NLNG), so that the company can increase its annual supply to the domestic market.
The board of NLNG in the Q3 of last year had approved the increase of its supply to the domestic market from 350,000 metric tonnes to 450,000 metric tonnes. But this is not enough to meet domestic demand.
The Federal Government encouraging the NLNG to increase its supply of the product to at least 1.5 million metric tonnes, will not only meet domestic demand, but will also ease the demand for scarce foreign exchange, and sustained the country’s commitment to Paris Climate Change Agreement.