As part of its move to stabilise the gas price over the next 12 months, the Federal Government of Nigeria has banned the Export of Liquefied Petroleum Gas (LPG) within the country to address rising prices. The measure, which aims to stabilise prices and improve domestic supply, will take effect on November 1, 2024. The Minister of State for Petroleum Resources (Gas), Mr. Ekperikpe Ekpo, issued the directive during a meeting with key stakeholders in Abuja. Ekpo, through his representative Louis Ibah, voiced worries regarding the increased prices of LPG, which have become a major strain on families.
Also, the discussion, which featured delegates from the Nigerian National Petroleum Company Limited (NNPCL) along with various stakeholders in the LPG market, aimed at identifying immediate strategies to tackle the rising costs. Despite earlier attempts to regulate the market, LPG prices have increased from an average of ₦1,100 to ₦1,250 per kilogram, hitting a high of ₦1,525 per kilogram. To address these difficulties, Mr. Ekpo declared that starting November 1, domestic LPG production will be banned from export. Rather, any LPG that producers wish to sell abroad must be substituted with the same quantity of imported LPG at prices that reflect actual costs.
NMDPRA is tasked with creating a new pricing structure within 90 days.
This initiative aims to focus on local demand and provide citizens with affordable options for cooking gas. The existing strategy of indexing LPG prices to international markets, including those in the Americas and East Asia, has increased domestic costs even though the nation is a producer. To address this issue in the short term, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has been charged with developing a revised pricing structure in the next 90 days. This structure will focus on the expenses associated with local manufacturing, aiming to deliver more equitable prices for the people of Nigeria.
However, the initiatives extend past just tackling immediate issues. Mr. Ekpo elaborated on the administration’s comprehensive strategy to enhance LPG blending, storage, and distribution systems. In the coming year, the focus will be on establishing facilities to increase domestic capacity and eliminate reliance on exports until Nigeria reaches LPG supply self-sufficiency and ensures stable pricing. The Minister emphasised that these measures aim to protect the public from the financial hardship brought on by the ongoing increase in cooking gas costs.
Govt focuses on boosting local supply to assist families across the nation.
Furthermore, this action follows the formation of a senior committee in November 2023, which analysed the LPG industry and ensured price stability. Headed by Mr. Farouk Ahmed, the Chief Executive of NMDPRA, the committee has been diligently working on this issue. He has collaborated extensively with industry partners, but the problems caused by fluctuating prices remain unresolved. Despite the government’s efforts, costs have consistently increased, causing significant dissatisfaction among the citizens. The government plans to stop exporting gas and prioritise local supply to support families nationwide.
Mr. Ekpo emphasised the dedication to reducing the cost of cooking gas and ensuring it is easier to obtain, suggesting that these steps will alleviate many citizens’ financial burdens. Therefore, as the new pricing framework is developed and Infrastructure for the LPG market is expanded, the government remains optimistic that these efforts will address the root causes of price fluctuations. On the other hand, there are concerns about the potential impact of these policies on the economy. Stakeholders argue that banning LPG exports may affect the Revenue generated from foreign sales, affecting the country’s foreign exchange reserves and overall economic development.
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Lastly, stricter regulations on gas producers could disrupt their business activities, leading to declining investments within the energy industry. While the government’s primary objectives are stabilising prices and protecting citizens from economic hardship, these goals must be balanced against the potential impact on the overall economy. While beneficial for local consumers, the ban on LPG exports may reduce the region’s presence in the global market, affecting Trade partnerships and export income. This tension between domestic needs and International Trade priorities will require careful management in the coming months.