The Nigeria LNG Limited (NLNG) has revealed possible causes of the rise in the price of Liquefied Petroleum Gas (LPG), otherwise known as cooking gas, in the domestic market. The price of LPG has risen from about N600 per kg to about N900–N1,100 per kg, depending on the location. But the General Manager, External Relations and Sustainable Development, Andy Odeh, said in a statement that the price hike has nothing to do with NLNG supplies. He linked the rise in price to exchange rates, and escalating price benchmarks mirroring crude oil prices.
He said that the domestic LPG market, like any other, is subject to dynamic market forces and various external factors. Factors such as changes in exchange rates, escalating price benchmarks mirroring crude oil prices, and the Panama Canal drought-induced vessel scarcity impacting transport costs, especially for imported LPG, have had significant effect on energy prices in recent times and could undoubtedly be some of the reasons for recent price hikes witnessed in the domestic market.
Media reports are speculative, says the NLNG manager.
Therefore, the manager dismissed media reports as speculative and indicative of a fundamental misunderstanding of Nigeria intricate market dynamics. According to him, NLNG has been making defining contributions to the domestic LPG market, which has spurred the steady growth of the nation’s LPG market volume from less than 50,000 metric tons of imported LPG in 2007 to over 1.3 million metric tons of both domestic and imported LPG. NLNG currently delivers over 450,000 metric tons of Butane (the main product in cooking gas) annually and has embarked on domestic propane supply to further grow the market.
Also, the company has committed its entire Butane and Propane production to the domestic market from 2023. Despite feed gas challenges, it continues to supply LPG to the domestic market, accounting for approximately 40 percent of the total market volume. Since the beginning of the year, NLNG has delivered over 380,000 metric tonnes of LPG using the company’s dedicated LPG vessel. The company has remained committed to delivering domestic LPG to locations as close to the market as possible by diversifying delivery points starting with Lagos in 2023.
Company is collaborating with relevant stakeholders.
This has fostered some competition among terminal owners and ultimately reduced consumer supply chain costs. In his words, “Efforts are ongoing to reach terminals in Warri and Calabar as soon as the challenges limiting safe delivery of volumes to these other locations are cleared.” He assured that NLNG maintains an unwavering commitment to ensuring the reliable supply of its LPG production to the domestic market at prices that are reflective of the market. Hence, the company has not hoarded any of their products or arbitrarily fixed prices on them.
Odey added that the company is collaborating with relevant industry stakeholders to achieve this objective and will remain focused on achieving its mission through this avenue among others. Meanwhile, the Nigerian Association of Liquefied Petroleum Gas Marketers (NALPGM) had earlier speculated the high cost of cooking gas. The group linked the hike in price to rising international prices, high tax rates, high prices of vessels, forex scarcity, and naira devaluation. These are the factors contributing to the rising prices of LPG in different locations.
NALPGM president comments on the current situation.
President of the group, Olatunbosun Oladapo, said, “Everybody is crying. Consumers, middlemen, and retailers are feeling the impact because business is now on the low side.” He said that the situation is unfortunate because prices are going higher and Nigerian consumers are passing through very difficult times because they can no longer afford gas. Local taxes are also worsening the problem. He urged the the government to come in and alleviate the suffering of the masses by providing palliatives and reducing taxes and levies.
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NLNG gives reasons for gas price hike. – GM links the situation to exchange rates and escalating price benchmarks. – Express your point of view.
I totally understand your concern about the recent gas price hike. It’s frustrating when prices go up, especially when it affects essential commodities like gas. The NLNG GM’s explanation about the situation being linked to exchange rates and escalating price benchmarks sheds some light on the factors contributing to the price increase.
Exchange rates play a significant role in determining the cost of imported goods, including gas. Fluctuations in exchange rates can directly impact the price of gas, as it is often imported from other countries. If the local currency weakens against the currency of the exporting country, it can lead to higher prices for imported gas.
While it’s important to understand the reasons behind the price hike, it’s also crucial to explore ways to mitigate its impact. Governments and industry stakeholders should work together to ensure transparency in pricing mechanisms and promote competition in the gas market. This can help create a more balanced and affordable pricing structure.
In the long run, it’s essential for countries like Nigeria to focus on diversifying their energy sources and reducing dependency on imported gas. Investing in renewable energy and exploring domestic gas reserves can help create a more sustainable and stable energy market.
The NLNG GM’s observation that the problem is tied to rising exchange rates and price standards provides an understanding into the reasons behind the price hike.
Exchange rates play a major role in determining the price of imported goods, particularly gas.we should do something to make all things price reduce things are too cost in the county
Gas price hikes are explained by NLNG. Exchange rates and rising price benchmarks are the reasons GM attributes to the problem.Unfortunately, part of the cause for the increase in the cost of products and services is Nigeria’s currency rate. It accurately reveals the degree of depreciation of our currency.