Why the price of LPG (Cooking Gas) is falling in Nigeria
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Comment(s)
- Author:
Muyiwa Ige(LPG Stakeholder and Consultant)
The drop in the price of LPG (Cooking Gas) which has been ongoing for about 2-3 months, was recently disseminated nationwide when a gas payment receipt posted online by a Gasland Nig. Limited customer, went viral.
Although many reasons have been adduced for the recent fall in the price of the product (which is a welcome development to every good-intentioned Nigerian), Niglpgas.com will objectively state the actual reasons responsible for the recent LPG(Cooking Gas) price drop.
1. Lower Demand for LPG(Cooking Gas)
When the price of the product rose substantially between November 2022-February2023, to as high as N1000 per kg in some locations nationwide, many households ditched cooking gas for cheaper energy sources like charcoal, firewood and public power.
Coincidently, the harmattan period - due to the absence of rainfall was a period when the supply of firewood was abundant, and outdoor cooking very conducive.
All these resulted in a reduced demand for the product and a corresponding fall in its price till the present moment; albeit the demand for the product is gradually increasing due to the onset of the raining season in Nigeria, and the summer season in Europe.
2. The Summer Season in the United States, Europe and nations with similar climatic conditions
Traditionally, LPG prices worldwide peak during the winter season in the United States and Europe, when the demand for LPG for heating purposes becomes extremely high.
As summer begins in the US and Europe, the demand for LPG drops significantly, triggering a fall in the price of the product globally.
The fall in the international price of LPG has impacted Nigeria, which has seen the price of 20 Metric Tons of Cooking Gas at the LPG Terminals going for N9,300,000, as against N12,000,000 it was sold, a few months ago.
3. Stable Supply from NLNG
The supply situation from NLNG, the dominant domestic producer and supplier in Nigeria, has been very robust in the past few months.
Alfred Temile, the LPG carrier charted by the NLNG for its domestic supply scheme, has been very busy, shuttling between NLNG’s Bonny Island Export Terminal in Rivers State and the coastal LPG Terminals in Lagos and Port-Harcourt, week by week, without fail.
The current and past management of NLNG deserve ‘thousands of metric tons’ of commendation for stabilizing the supply of LPG within Nigeria.
This has reduced the importation of LPG from overseas and kept the price of the product at reasonable levels.
4. Favorable Pricing Template by Gasland, Bovas and AA Rano
Gasland , Bovas and AA Rano LPG companies, deserve some kudos for selling cooking gas at affordable rates at their LPG Plants and Stations.
The competitive prices being offered by these companies has checkmated some other LPG companies from selling excessively high prices of LPG to the people.
Therefore, the low-price policy regime of Gasland Nigeria Limited, Bovas and Company and AA Rano Nigeria Limited, has a notable impact on the falling LPG prices being witnessed nationwide.
5. Improved Security of Gas Infrastructure in the Delta
The improved security situation in the Niger-Delta region of the country, which accommodates the greatest percentage of gas infrastructure in the country, is not unconnected to the stability of domestic LPG supply, and the consequent reduction in the price of LPG nationwide.
The disruption of natural gas feedstock to LPG production plants of companies like NLNG, KHL Kwale Hydrocarbon and others, by the breaching of the raw natural gas trunklines, starves the plants of the feedstock and paralyzes their LPG production capabilities.
The inability of the LPG producers to receive natural gas to produce the product usually causes a scarcity of LPG in the country, and makes the importation of the product the only available option.
The recent surveillance contract awarded to Chief Government Tompolo and other indigenous companies for the security of Oil and Gas Pipelines and other relevant infrastructure in the region, seems to be paying off handsomely, with the reduced pipeline vandalism being experienced; invariably leading to higher production of LPG and the lowering of the price of the product.
6. Availability of more LPG Transport Trucks
Top LPG companies like Rain Oil, Ardova PLC, Petrocam, Gasland, Bovas, AA Rano, Technogas, Nipco PLC, 11 PLC, Matrix Energy, Shafa Energy, Dharmattan, Ecogas and Himma Gas, have invested massively in the acquisition of LPG Bridgers and Bobtails, to evacuate LPG from the coastal depots to their LPG Plants and other LPG receiving facilities.
The timely evacuation of LPG from an LPG coastal terminal’s tank farms makes it possible for LPG vessels that berth at the terminal to quickly discharge their cargo and sail away without wasting time.
But when there are insufficient LPG Road Tankers to evacuate products from a coastal depot’s tanks, the LPG vessel needs to wait for several days at a huge cost to the LPG Terminal or the marketer that brought in the cargo.
This huge cost will invariably be passed on to the final consumers of LPG in the form of high prices.
The huge investment in the procurement of state-of-the-art LPG trucks by these leading LPG companies, has made the timely evacuation of LPG (Cooking Gas) from the coastal LPG terminals possible, which has led to shorter LPG vessel waiting times, and consequently resulted in lower LPG prices in the country.