Gas: Consumers groan over high price, low import


Despite Federal Government’s waivers on the payment of Customs duty and Value Added Tax on Liquefied Petroleum Gas (LPG) importation, shippers are unable to import an average of 50,000 tonnes valued at $23.5 million (N44.7 billion) cooking gas monthly because of the high exchange rate of naira to the dollar. At the nation’s seaports, only two vessels are expected to offload 11,000 tonnes of the product valued at $5.18 million this month as Nigeria’s demand surge from 1.3 million tonnes in 2023 to 1.5 million tonnes in 2024.

Currently, there is fear that lack foreign exchange may hamper smooth importation of 660,000 tonnes of LPG needed into the country this year. It was revealed that the price of LPG, which was N20 million per 20 tonnes in February 5, had gone up to N22 million per 20 tonnes in February 22 in Nigerian market, while a tonnes is $471 per tonne in United States, Latvia, The Netherlands and United Kingdom. According to the Nigerian Ports Authority (NPA)’s shipping data, one of the vessels, Alfred Temile berthed at Kirikiri Lighter Terminal (KLT) Phase 3a, Tincan Port with 7,000 tonnes, while Claude laden with 4,000 tonne will discharge its consignment at AVM Shafa, Delta Port. The shipping data also noted only six vessels discharged 39,500 tonnes (39.5 million kilogrammes) between December 2023 and January 2024 as Alfred Temile discharged 8,000 tonnes at New Oil Jetty (NOJ), Apapa; Verrazane, 11, 200 tonnes; Sapet Gas, 4,000 tonnes; Eco Artic, 6,000 tonnes; Balearic Gas , 7,000 tonnes and Verrazane, 3,300 tonnes. Worried by the high cost of the product, the Natural Oil and Gas Suppliers Association of Nigeria (NOGASA) complained last week over port charges by NPA and the Nigerian Maritime Administration and Safety Agency (NIMASA). The National President of NOGASA, Mr Benneth Korie, noted that there was no sense in carrying out transactions in dollars within the country.

Among other problems, oil and gas marketers have always lamented that when mother vessels bring in refined products to Lagos, smaller vessels that were chartered to discharge from the bigger containers charged in dollars, while the NPA also takes its docking charges in dollars. Korie stated that many members of the association may soon be jailed by the commercial banks, with interest rate at 30 per cent coupled with the current economic situation. Meanwhile, the Federal Government has stopped the exportation of LPG in order to reduce the scarcity and soaring price in the country. The Minister of State for Petroleum Resources, Ekperikpe Ekpo said during the “Internal Stakeholders’ Workshop” in Abuja with the theme: “Harnessing Nigeria’s Proven Gas Reserves for Economic Growth and Development.” that the ministry was discussing constantly with critical stakeholders like the Nigerian Midstream and Downstream Petroleum Regulatory Authority and operators such as Mobil, Chevron and Shell to address the issue. He explained that once there was a stoppage of the export of locally produced domestic gas, there would be more volume for the domestic market which would automatically reduce the price of the product. He noted: “We are interacting with critical stakeholders to ensure that there is no exportation of LPG. “All LPG produced within the country will have to be domesticated. And when this is done, the volume will increase and of course, the price will automatically crash. “I am in contact with the regulation, NMDPRA, we hold meetings almost on daily basis, and the producers such as Mobil, Chevron, and Shell. So there is that hope that things will turn around. We don’t need to make noise about it.” It would be recalled that In a letter dated November 28, 2023, from the Ministry of Finance, the Federal Government approved a 100 per cent tax waiver for LPG importation amid the rising cost of the product in the domestic market. It said: “Accordingly, the importation of LPG utilizing HS Codes 2711.12.00.00, 2711.13.00.00 and 2711.19.00.00 is exempt from Import Duty and Value-Added Tax. Consequently, the Importation of LPG shall incur a 0 per cent duty rate and 0 per cent VAT rate, effective immediately.”

Nigerians have continued to lament the soaring price of cooking gas as the product price has increased from N9,000 for 12kg to over N13,500 to 14,500, depending on the location in Nigeria. However, despite the rise in local consumption, lack of enough facility at Lagos jetties and challenges of sourcing foreign exchange have hampered smooth importation of 660,000 tonnes of LPG needed into the country as there are only 12 LPG depots in Lagos with capacity to store 69, 968 tonnes (6.9 million litres) where the product is largely consumed. Early in the month, the Minister of State for Petroleum Resources (Gas), Ekperikpe Ekpo, had constituted a committee headed by the Chief Executive of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), Farouk Ahmed to come up with recommendations on how to boost supplies and crash the price within a week. However, regardless of the assurance, the price of cooking gas has continued to increase with a kilogramme selling for N1,400 in some parts of the country, translating to 17,500 for a 12.5 kilogramme cylinder.

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