LPG Expansion/Penetration Programme Targets 5mn MT Domestic Consumption By 2022

….Plans injection of 20 million cylinders by the same year

The campaign for the use of the use of Liquefied Petroleum Gas, LPG in every home in Nigeria thickens as the Federal Government of Nigeria FGN LPG Expansion and Penetration programme targets 5,000,000 MT domestic consumption  by 2022 as well as the injection of 20 million cylinders by the same year.

 The Managing Director, NNPC Retail Limited, Billy Okoye, represented by the Manager NNPC Retail Ltd, John Chiejine made this known at the  NLPGA & LPG summit 2019 in Lagos.

Speaking at the Summit on Supply , Demand and Pricing outlook, the impact of international LPG markets on Nigeria, he said, “FGN LPG Expansion and Penetration programme targets 5,000,000 MT domestic consumption by 2022 as well as the injection of 20 million cylinders by the same year”.

He stated FG needs to give incentives to local cylinder producers, importers of LPG accessories and in-country LPG production facilities to achieve these targets and also that the improvement in public transportation infrastructure will go a long way in easing LPG distribution for the benefit of Nigerians.

“Encouraging private sector development of storage and handling facility for LPG will also boost the sector. Government backed public awareness campaigns on the benefits and advantages of LPG usage will help increase awareness and encourage more citizens to switch from kerosene and firewood use to LPG”, he said.

The NNPC Retail boss further stated that providing affordable long-term financing for private sector organizations with the intention of participating in the LPG value chain will provide the much-needed stimulus for this all-important sector of the Nigerian economy.

“The time for an LPG revolution in the Nigerian energy sector is now! All hands must be on deck to make this happen”, he opined.

Speaking in the same vein, the Director General /CEO Infrastructure Concession Regulatory Commission, Chidi Izuwah Snr, listed the benefits of Public, Private partnership to include maximizing the use of each sector’s strength, reduction of development risk, reduction of  public capital investment, mobilizing excess or underutilized assets and improvement of efficiencies/quicker completion.

Others are improvement of service to the community, improvement of  cost effectiveness, sharing  resources, sharing/allocating risks and mutual rewards.

He however noted LPG industry challenge in Nigeria to include continuous deforestation as over 50 per cent of households that still rely on firewood as cooking fuel, prohibitive fee structures ( duties, importation procedures and fees), Nigeria is a net exporter of LPG in Africa, producing over 2 MTPA, and barely consumes 15 per cent of the volumes while exporting the rest, significant latent unmet demand  and poor Infrastructure networks ( road networks and rail networks.

Other are sub-standard products from some supply sources, inefficiencies in shipping  operations, inadequate low-draft vessels,  inadequate bulk storage facilities, inadequate transportation infrastructure ( road networks/functional pipelines/rail network), no functioning cylinder manufacturing plant in-country and in adequate and unevenly spread receiving terminals, limited jetty availability.

The  DG also noted PPP opportunities in LPG Industry will facilitate investments along the supply chain.

Gas Infrastructure Financing according to him will facilitate marketing traders and shippers (Bulk supply) ,manufacturers of LPG Cylinders, manufacturers of tanks/ appliances, gas processing aggregation partnerships, terminal/Storage infrastructure investors, growth of new entrants and plants significant demand.

The advantages  of Private partnership in LPG industry according to him will enhance of foreign capital, private sector expertise and innovation, eliminate subsidy burden – cars, job creation ,tax base expansion, increased competition amongst domestic LPG industry and encourage foreign trade with other countries with regulated imports and exports.

Others are economies of scale will ensure prices are reduced, enhancement of technology that will bring about efficiency and safer practices, reduction  the debt burden of the country.

Supporting this view, VP Business Development LPG & Olefins

Argus Media, Alan Hayes, said  “Africa sits at an interesting point – between 2 big trading hubs, and able to trade with multiple regions. The “logical” prices should be the lowest delivered price logistically achievable. More often than not, prices in Nigeria are heavily influenced by import prices”.

Therefore, Argus, he said had launched a new West Africa LPG Index – based on the lowest price of LPG delivered to Lagos from either the USGC or NWE.

The V.P said that LPG supply and demand continues to grow in an era of abundant gas production and incremental cooking fuel and feedstock needs.

“The pace of production should see attractive prices relative to naphtha and crude, Asia is largely the price-setting region, and when China stops buying, global prices tend to fall, there is a real need for a pricing mechanism that genuinely reflects market dynamics in West Africa”, he said.

“We hope that our new Index can be part of the solution. Similarly, in order to ensure that exporters fully capture market value while remaining competitive export prices must be based on market fundamentals”, he stressed.