The Nigerian Association of Liquefied Petroleum Gas Marketers has announced a plan to increase prices for cooking gas, adding to the plethora of spikes in commodity costs choking consumers.
The President of the association Olatunbosun Oladapo attributed the price hike to the recent subsidy, electricity, and forex reforms carried out by the federal government.
Oladapo said the reforms, which have significantly stoked the cost of goods and services, have added to rising international prices, high tax rates, and prices of vessels – leaving marketers with no other option than to conduct an upward review of cooking gas prices.
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.
“It is starting next week because international prices have gone up. The prices of vessels have gone up and taxes are high, but consumers are not earning more.
“Their purchasing power has gone down. Everybody is crying. Consumers, middlemen, and retailers are feeling the impact because business is now on the low side,” he said.
The move which comes amid the declining spending power of consumers has been decried as an additional nail on the coffin of suffering Nigerians, a situation Oladapo acknowledged.
“The situation is very unfortunate because prices are going higher. Nigerian consumers are passing through very difficult times because they can no longer afford gas,” he said.
The move also follows the push by organized labor to force the government to provide palliatives that will mitigate the impacts of the reforms. Though the push has suffered setbacks, with the Nigeria Labour Congress and the Trade Union Congress embarking on only a day nationwide strike, Oladapo believes one way the government should provide the palliative is through tax breaks.
He indicated that besides the impacts of President Bola Tinubu’s economic reforms, taxes have played a major role in the decision of marketers to review gas prices.
“The government should come in and alleviate the suffering of the masses by providing palliatives, reducing taxes and levies.
“You can imagine that for every 1kg of gas priced at N700, tax would take way N3.50. How much is left in such a business?” he lamented, adding that “local taxes are worsening the problem.”
As part of his economic reforms, Tinubu has set up a committee on fiscal policy and tax reforms, aimed at eliminating the issue of multiple taxation among other bottlenecks hindering economic growth; the implementation is expected to take a while.
The period is expected to see a further increase in the price of commodities, including gas, as the naira dips further in the FX market.
The naira traded at N920/$1 in the parallel market on Wednesday, compounding inflationary shocks.
LPG prices in Nigeria are determined through international benchmarks using Nigerian Liquefied Natural Gas Contract prices and are consistently influenced by global price trends.
According to a National Bureau of Statistics report on retail gas prices, the mean retail cost for refilling a 5kg cooking gas cylinder showed a month-on-month decline of 6.71%, dropping from N4,360.69 in May to N4,068.26 in June.
On a year-on-year basis, this marked a decrease of 3.56% from June 2022’s figure of N4,218.38.
Oladapo did not say how much the increment will come with.