Cooking Gas Prices Set to Soar in Nigeria Next Week, and Naira Devaluation Bites, Other Factors

Cooking gas prices in Nigeria are set to increase next week, according to the Nigerian Association of Liquefied Petroleum Gas Marketers (NALPGAM).

This is due to a combination of global and local factors that are affecting the supply and demand of liquefied petroleum gas (LPG), also known as cooking gas.

Some of the global factors that are driving up the prices of cooking gas include:

• Rising international prices: The price of LPG is determined by the Nigerian Liquefied Natural Gas (NLNG) Contract Price, which is based on international benchmarks. The NLNG CP can change up to three times a year, depending on market dynamics. Currently, the international prices of LPG are high due to increased demand from Europe and Asia, especially as the winter season approaches.
• Vessel scarcity: The availability of vessels to transport LPG from the NLNG plant in Bonny Island to the depots in Lagos and other parts of the country is limited due to high charter rates and floating storage. Many traders are using the vessels as floating storage to speculate on higher future prices of LPG, reducing the supply of vessels for actual delivery. This also increases the transportation costs for LPG importers and marketers.
• Forex scarcity and naira devaluation: The exchange rate of the naira to the dollar affects the domestic price of LPG, as the NLNG sells its products in dollars to local off-takers. The scarcity of foreign exchange in the country and the devaluation of the naira have made it more expensive for marketers to buy LPG from the NLNG or import it from other countries.

Some of the local factors that are impacting the prices of cooking gas include:

• High taxes and levies: The government imposes various taxes and levies on LPG products, such as value-added tax (VAT), petroleum products pricing regulatory agency (PPPRA) levy, port authority levy, NIMASA levy, and others. These taxes and levies increase the cost of LPG for marketers and consumers, reducing their profit margins and purchasing power.
• Low consumer demand: The high prices of cooking gas have discouraged many consumers from buying it, leading to low demand and sales. Many consumers have resorted to alternative sources of energy for cooking, such as firewood, charcoal, and sawdust. These alternatives are cheaper but more harmful to the environment and health.

The president of NALPGAM, Olatunbosun Oladapo, described the situation as unfortunate and called on the government to intervene by providing palliatives, reducing taxes and levies, and ensuring adequate supply of forex and vessels. He also appealed to marketers who have access to local LPG to be considerate and compassionate in fixing their prices.

Oladapo said that the price of LPG has been on the rise in recent months, and that the situation is only going to get worse.

“The price of LPG is going to increase next week because international prices have gone up,” he said. “The prices of vessels have gone up and taxes are high, but consumers are not earning more. Their purchasing power has gone down.”

Oladapo also said that the devaluation of the naira is also contributing to the price hike.

“The dollar exchanged for N749.62 on Wednesday, according to the Central Bank of Nigeria,” he said. “This means that the price of LPG is going to be even higher for consumers.”

The price hike is going to have a significant impact on Nigerian consumers, who are already struggling to make ends meet.

Many people in Nigeria rely on cooking gas for their daily cooking needs, and the price hike is going to make it even more difficult for them to afford food.

The government needs to take steps to address the rising cost of cooking gas, or else it is going to have a devastating impact on the poorest Nigerians.

In addition to the price hike, consumers are also facing other challenges when it comes to cooking gas.

There is a shortage of LPG cylinders in Nigeria, and many people are having to wait weeks or even months to get their hands on a cylinder.

The shortage is due to a number of factors, including the high cost of importing cylinders and the lack of investment in the LPG industry.

The government needs to take steps to address the shortage of LPG cylinders, or else it is going to make it even more difficult for consumers to get access to cooking gas.

The prices of 20 metric tonnes of LPG at the major depots in Apapa, Lagos, between July 28 and August 7 had been between N10.7m and 11m. The price of LPG per kilogram dropped from an average of N730 in June to around N600 in July and increased to N750 in August due to the naira devaluation, the Punch reports.

As of June, the price dropped by 76.1 per cent to 2.10 per one million British Thermal Units on May 31 from 8.78 per one million BTU, according to U.S. Energy Information Administration.

A report by the National Bureau of Statistics on retail gas prices said the average retail price for refilling a 5kg cylinder of cooking gas decreased by 6.71 per cent month-on-month from N4,360.69 recorded in May to N4,068.26 in June.

On a year-on-year basis, it decreased by 3.56 per cent from N4,218.38 in June 2022.

On state profile analysis, Kwara recorded the highest average price for refilling a 5kg cylinder with N4,750.00, followed by Niger with N4,691.16, and Zamfara with N4,683.33.

On the other hand, Ondo recorded the lowest price with N3,287.86, followed by Ekiti and Nasarawa with N3,288.46 and N3,364.62, respectively.

The rising cost of cooking gas is a major problem for Nigerian consumers, and the government needs to take action to address it.

The government can help to reduce the cost of cooking gas by reducing taxes on LPG, providing subsidies to consumers, and investing in the LPG industry.

By taking these steps, the government can help to make cooking gas more affordable for Nigerian consumers and alleviate the burden on their wallets.

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