Marketers, retailers decry increasing price of cooking gas

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Marketers, retailers decry increasing price of cooking gas
November 14, 2019

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Liquefied petroleum gas (LPG), commonly called cooking gas, is abundant in Nigeria. But it is not easily accessible to consumers as it should be. Also, the price of LPG that should be cheaper in view of the abundant reserves of natural gas it is not. Local price is always determined by happenings overseas and the international market. LPG marketers, under the aegis of the Nigerian Association of Liquefied Petroleum Gas Marketers (NALPGAM), and retailers, under the umbrella of the Liquefied Petroleum Gas Retailers (LPGAR), a branch of Nigeria Union of Petroleum and Natural Gas Workers (NUPENG), have cried out, saying cooking gas is getting out of reach of consumers. To them, winter and other weather conditions overseas and international price index should not determine the price of a product Nigeria has in abundance, EMEKA UGWUANYI reports.

 

Members of the Nigerian Association of Liquefied Petroleum Gas Marketers (NALPGAM) are not happy with the increasing price of liquefied petroleum gas (LPG) also called cooking gas.

The marketers, reacting to the unwarranted price hike of the product, noted that this is happening despite concerted efforts of the government and stakeholders to deepen the use of LPG in the country.

NALGAM Executive Secretary, Mr. Bassey Essien, in a document by the group, said at this time of the year in the past, price hikes used to be attributable to winter and increased demand for heating energy and international price index. ‘’We have consistently questioned why a product in abundance in our country should become a victim of issues occurring internationally,’’ he said.

He said within the last one week, LPG price has soared and markerters did not know the cause. The price hike would dovetail into consumers paying more for the product. The consumers would blame marketers who are also caught up in the price hikes, Essien said.

Within five days, the price of a 20-metric tonne (MT) of LPG, which  sold for N3.15 million, jumped to N3.5 million, N3.9 million and within a few hours moved to N4.2 million, despite that the product has been in the storage of the terminals when the price was even sub N3.5 million, so why the sudden upsurge? he queried.

According to him, efforts to know the cause of the price increase from the terminals were futile.

At one of the terminals, there was a denial of any price increase. The head of LPG Sales at the company said the company had no stock, but when asked to explain the increase to N4.2 million, when the company had no stock, he was evasive. Some marketers, who had paid for LPG when it was N3.45 million and were awaiting loading were being intimidated with refund of their money except they agreed to pay the difference despite having tied down their funds without loading their trucks.

At another terminal, it was attributed to the interplay of forces of demand and supply; and in this case demand had outstripped supply. Elsewhere, importers have also attributed low supply to delay in accessing foreign exchange from the Central Bank of Nigeria (CBN), which accounted for delayed payments to their business associates thus, the inability to oil the LPG supply cycle.

Essien said: “The Association is hereby disassociating itself and members from the antics of the current price hike and therefore, maintaining that the price increase is not the handiwork of marketers but rather that of the terminal owner, importers and the Nigeria Liquefied Natural Gas (NLNG). Marketers are bemoaning the situation as the development has adversely affected business planning.

‘’If the trend is not halted immediately, the price of a 12.5kg cylinder of cooking gas may soon sell for over N6, 000 and well out of the purchasing power of the average consumer.

“This brings to question when the issue of product availability will ever be holistically addressed. We cannot deepen the use of LPG if availability of the product is not guaranteed.

“In the immediate need to reverse the price hike, we are calling on the NLNG to: flood the market with cooking gas since they have the capacity to do so; increase the frequency with which the vessels delver LPG from Bonny to the terminals; importers to free the PPMC Depot in Lagos for the delivery of NLNG product allocation; NLNG should supply LPG to other coastal terminals outside Lagos to reduce the inherent pressure on the terminals in the Southwest; and NLNG should deploy vessels of smaller capacities to access the coastal terminals if product availability must be achieved.”

On their part, members of Liquefied Petroleum Gas Retailers (LPGAR), a branch of Nigeria Union of Petroleum and Natural Gas Workers (NUPENG), in a statement noted that the arbitrary increment in price of LPG and supply shortages is embarrassing especially for a country like Nigeria with abundant gas reserves.

The Branch Secretary of LPGAR, Comrade Olukayode Aborisade Solomon, said LPGAR branch of NUPENG is highly dissatisfied with sudden upsurge in price of liquefied petroleum gas (LPG) by tank farm (LPG depots) operators and what appears to be a deliberate reduction in supply or rotation of supply amongst the tank farms.

These, the group said, had led to about 90 per cent increment in gas price within a space of one week. It is likely that this ugly situation will continue if there is no urgent intervention, especially as Christmas and New Year approach.

“Though the increment began about a month ago but did not significantly reflect in the price sold to end-users because retail outlets had absorbed the difference believing it would soon normalise.

However, without any sign of imminent supply or pricing crisis, the price in the last one week suddenly skyrocketed, reaching about 90 per cent high. Just a week ago in Lagos and some neighbouring states, 12.5kg of LPG was sold for between N2,600 and N3,000 in retail outlets. It is now sold for between N4,000 and N4500 at retail outlets, owing to sudden hike in the price by tank farm operators.

“If this situation remains unchecked it is capable of undermining the expected development of LPG sector in the country which has been championed by the government and other stakeholders over the years.

“Nigerians especially the low income earners who are beginning to adapt to LPG for both domestic and commercial uses are being subjected to exploitations at the time they are already being confronted with economic hardships.

“The situation is already forcing many users to abandon their cylinders and opt for other sources of cooking energy such as firewood and saw dusk irrespective of the attendant health risks and resultant environmental degradation that results from those alternative energy sources.”

Solomon said LPG retailers had to contend with end-users who often accuse them of being responsible for the increments. Unknown to most of the end-users, LPG retailers are the worst hit as they have been reduced to the status of mere agents toiling day and night to make LPG available to Nigerians often with little or no profits because of the monopoly of a cartel.

“Our union over the years has been decrying what it views as manipulation of the sector by a few privileged individuals and business concerns in Nigeria including some multinationals operating in the oil and gas sector.

“The people behind the business organisations benefiting from this arbitrariness are the same people that have been creating the impression within the government quarters that insufficient retail outlet in Nigeria is the problem militating against the deepening of LPG in the country. This they do to secure approvals and incentives for establishment of retail outlets to the detriment of small and medium size LPG businesses.

 

They, therefore, neglect the major areas they are expected to concentrate which include LPG production and provision of storage facilities (tank farms).

“If enough production or importation of LPG is made and enough storage facilities provided, LPG would become affordable and accessible to Nigerians because there are hundreds of thousands of business-minded Nigerians who are willing and ready to penetrate even the remotest villages to stimulate LPG usage and also meeting demands.

“Our union is calling on the government and the rest of the stakeholders to urgently intervene in order to restore sanity. There is nowhere in the world that government leaves such a vital sector solely in the hands of a few commercial interests especially where there is apparent case of manipulation.”