Cooking Gas: We are not responsible for price hike – NLNG
The leadership of the Nigeria Liquefied Natural Gas (NLNG) Limited has refused to take responsibility for the supply shortfall and price hike of Liquefied Petroleum Gas (LPG) otherwise known as cooking gas in the country.
The price of LPG in the domestic market is dependent on several market factors, including the forces of demand and supply. On the supply side, NLNG plays a pivotal role in the Nigerian domestic LPG market in line with the commitment it made to help deepen the market, the company stated.
According to the company in a statement issued on Monday and signed by Eyono Fatayi-Williams, General Manager, External Relations and Sustainable Development, it stated that it is erroneous, to say the least, that NLNG contributes to the supply shortfall of cooking gas in Nigeria and consequent price hike.
The company stated that it recently increased the volume of its annual commitment to the market from 350,000 to 450,000 metric tons, which is about 100% of its Butane production. Butane gas is less volatile and is, therefore, suitable for cooking. In 2020 alone, NLNG supplied over 80% of its LPG sales (Butane/cooking gas) to the Nigerian market.
“By committing 100% of its Butane production, NLNG has prioritised the domestic market, thus realising its domestic supply target safely,” it explained.
NLNG’s current maximum Butane production meets about 40% of domestic demand. The balance is supplied by other domestic producers or via imports. Therefore, NLNG’s production alone is not sufficient.
In order to achieve its aspiration for the domestic supply, a dedicated 13,000 metric ton vessel, LPG Alfred Temile, delivers the product to the market through Lagos and Port Harcourt terminals. The vessel’s delivery to these terminals are occasionally hampered by challenges at the terminal, including storage capacity, terminal access, draft restrictions and prioritisation of other products over LPG.
It stated further that NLNG’s domestic LPG pricing is most competitive compared to all other alternatives (imported and domestic supply). However, it is important to note that several factors such as VAT, Forex, etc., impact the pricing of the product which is indexed to the international pricing model.
The statement explained that NLNG’s drive towards deepening the domestic LPG market is pivotal in line with NLNG’s vision of helping to build a better Nigeria, and therefore it is optimistic that the eventual completion of its Train 7 Project will further will provide deepening the domestic LPG market.
NLNG is primarily an export company that produces 22 MTPA of Liquified Natural Gas (LNG) and 5 MTPA of Natural Gas Liquids (NGLs). It is grossly inaccurate to state that NLNG produces 22 Million Tonnes Per Annum (MTPA) of Liquified Petroluem Gas, otherwise known as cooking gas as it is made to believe in some quarter.
Recently a number of factors such as foreign exchange scarcity, introduction of 7.5 percent Value Added Tax (VAT) and other charges from Department of Petroleum Resources (DPR) and Petroleum Products Pricing Regulatory Agency, (PPPRA) have added to increase the price of the product.
A 12.5 kg cylinder of LPG now cost between N5, 800 and N6,700 in the market depending where the product is sold.