Tuesday, January 19, 2021 / 2:20 PM / by CSL Research / Header Image Credit: iStock
A ThisDay report quotes the General Manager, External Relations, Nigeria Liquefied Natural Gas (NLNG) Limited, Mrs Eyono Fatayi-Williams, stating that the increase in price of Liquefied Petroleum Gas (cooking gas) in the country is largely attributed to the low level of supply to meet local demand for cooking gas. She further stated that the company, being a major producer of cooking gas, produced a total amount of 375,000MT to meet the current estimated demand of 1 million MT in 2020, which translates to a shortfall in supply and as a result, led to higher price on the product.
According to data obtained from the Petroleum Products Pricing Regulatory Agency (PPPRA), the domestic supply of Liquefied Petroleum Gas stood at c.877,000MT in 2020 compared with c.683,000MT delivered in 2019, representing 34.3% increase y/y. A further analysis of the data showed that c.54% of the total LPG supply is imported while the remaining 46% is sourced locally. Over the years, the issue of importation of cooking gas despite the country's abundance of gas, has been a national economic problem which hinge on the back of dilapidated refineries. The continued policy inconsistencies and bureaucratic procedures in securing licences has made investment in the space less attractive. Resuscitating Nigeria's refineries has somewhat become an herculean task for reasons that remain unclear.
In our view, we believe this is a call to action for the government to actively collaborate with the private sector and provide incentives to elicit investors' participation in the LPG infrastructure that would enhance local production of gas. The government on its part, needs to implement policies aimed at removing existing unfriendly tariffs and taxation of the product and its associated equipment so as to attract the much needed private sector investment.