Cooking Gas: Why Price Keeps Soaring, What Govt Must Do Urgently-Marketers

By Dayo Emmanuel

Marketers of cooking gas have explained why the price of the product has continued to rise and how the government can intervene to arrest the situation.

Chairman of the Nigerian Association of Liquefied Natural Gas Marketers (NALNGAM), Mr. Olatunbosun Oladapo and Executive Secretary of the association, Mr. Bassey Essien recently were guests on a magazine program, ‘Sunrise’ on Channels Television.

Earlier in the year, 12.5kg cylinder of gas was sold for about N3,500 but now selling for over N10,000, the effects on investors, consumers and the general economy have been distressing.

Executive secretary of NALPGAM, Bassey Essien in his reaction said, it is a discouraging reality that the price of cooking gas is gradually slipping off the hands of the masses.

“The effects on consumers first is discouraging because they cannot afford to buy gas as they used to do in an average family going by the minimum wage,” he said.

Essien added that, “If 12.5kg cylinder costs over N10,000 and the way it is, it may even cost more, then the affordability would have reduced drastically. Now the government had earlier made so much gain in its efforts to move people into using gas, the achievement is now being eroded badly.

“The consumers have no choice than to go back to what we call dirty fuel; charcoal and firewood with attendant environmental implication. Embracing cooking gas had brought relief in terms of Medicare and cost because we know what it means by switching from gas to firewood in terms of the health effects as well as the frustration involved.”

Essien also noted that companies are already advertising charcoal stoves which will also jeopardize the forests in the face of global warming.

On the side of the investors, Essien lamented that more gas sellers are closing shops due to high cost of purchasing the product.

“Some years back, we had 200 to 300 gas outlets in Lagos, now we have 16 and about 90% of them are private investors who have taken money from the banks to establish. The local sourcing of LPG is just 40% and the balance of 60% is imported,” he said.

He added that, “The vessels that produce local contents can only access Lagos and Port Harcourt waters and other locations have to rely on importation and presently they cannot import due to the price and due to foreign exchange and suddenly the government introduced VAT and customs duties on the imported gas. As we speak, those private investors are not importing and there is shortage.”

According to the marketer, Nigeria consumes over 1.2m metric tons, the local production is just 40% and the rest 60% is imported.

Long ago, there was a statistic that only 10 percent of Nigerians cook with gas, then the government intensified efforts campaigning to encourage the use of cooking gas which many embraced. Quite a number of those who adopted cooking gas as a result of the campaign can no longer afford thee recent cost.

According to Essien, the consequence of the hike in price of cooking gas on health cannot be over emphasised. “People cannot afford good living right now and we are again being bombarded with several economic hardship that it takes the grace of God to survive. Food is the basic thing that should be in the house and if you can’t produce food on the table, what are we talking about?” He asked.

On whether the association is engaging the government, the NALPGAM official said they saw what is now happening way back and were in talks with the stakeholders including the storage and the government agencies involved.

“We noted our concern and we are still waiting for them but I know they are aware because the plight has been taken to every agency that should be concerned, the earlier they respond the better,” Essien said.

When asked what can be done about the tax on the importation of cooing gas which has been blamed for the increment in price, President of NALPGAM, Oladapo said, “Part of the intervention the association can do is to create awareness and to speak with the authorities on what to be done to arrest the situation. The President, Minister of Petroleum and Natural Resources have a lot of work to do.

“The minister has declared a decade of gas and he has been very supportive but all the gains of efforts made is gradually being lost. What should be done first is to suspend the charges, VAT should be suspended.

“Let me make it clear, no Kobo has been paid to the government on this VAT, they only wrote to the importers and terminal owners that the product they are selling is subject to VAT and subject way back to 2019, they had to be on red alert to put that into their cost template and that resulted into the price hike,” he revealed.

Oladapo stated further that, “The customs is also on their neck that they have to pay import duties. It is true the government needs money to run but when you want to discourage importation, you must have sufficient local production,” he advised.

Stating further, he revealed that the country has not produced a tenth of what the population needs and it is the gap the country is facing now.

“We have the deposit in abundance but processing it is the issue. Exploration is capital intensive and it takes time,” he said.

Oladapo however noted that the government as a matter of urgency must wade into the matter so that respite can come the way of Nigerians as soon as possible.

“The government should as a matter of urgency intervene immediately. The tax should be suspended so that importation could be done. When imported gas come into the country, the product will be available and the price will come down,” he advised.

The NALPAGAM President also noted that Nigeria in the past failed to plan ahead of what is now happening to the price of cooking gas.

“What we are suffering is the planning we lacked before. We must plan ahead to encourage investors to come into exploration. Investors will not come in now because the price is high, people cannot afford it, that is why when they produce, the market is not here and they would go and sell elsewhere because the per capital income of Nigeria is low.

“We need to stimulate the market, encourage them to buy, when the price is affordable they will buy and the only way to do that is to allow importation so that price can come down,” he said.

According to the NALPAGAM officials, presently the middle men are living large on the scarcity but when there is importation the product will be everywhere then the country should plan for proper exploration.

Continuing, Oladapo said those with license to produce should be encouraged to operate to support local production.

“The government should encourage those licensed to come in and produce. There are some molecules that are produced in this country but are not sold here. The government should come in.

“These people produce here but sell abroad. The government needs to look inward and allow everybody to sell to meet local demand. Of course every contract has some specification they all have terms of engagement.

“It was envisaged that by 2020 consumption of gas would have risen to 5m Metric Ton and by 2030 we should be hitting about 10m Metric Ton, let those licensed get necessary encouragement so they can produce,” Oladapo advised.