Some oil and gas experts have advised the federal government to invest heavily in the sector or provide intervention funds to private investors to stop the rise in liquefied petroleum gas (LPG) prices.
reports that many consumers and retailers of LPG have complained bitterly about the constant increase in the price of LPG and the perceived decline in quality, an effect that is unbearable for households and businesses due to its general use.
Dr Olanrewaju Aladeitan, an oil and gas expert, said he was surprised that 60% of our LPG comes from imports, while Nigeria is more of a gas-producing country than an oil-producing country.
In view of this, Aladeitan instructed the government to invest in the sector or, better yet, the Central Bank of Nigeria (CBN) to provide intervention funds to private investors to cushion the effect.
“By doing this, we would prepare for the Energy Transition which is there anyway. It will also help in our decarbonization campaign, ”he said.
Also, speaking with, economist Dr Chijioke Ekechukwu pointed out different reasons why the price of LPG has increased and is unstable in the country.
According to him, the annual local consumption of LPG is around 1.2 million metric tons, but NLNG only allocates 350 metric tons for local consumption, while the rest is imported.
He said the imported product is subject to a 7.5 percent value added tax (VAT).
“The portion of the imported price is determined by an exchange rate that oscillates between N410 and N570 per dollar.
“Often, due to port congestion, these imported gases attract demurrage which increases the cost,” he explained.
To find solutions to this price hike, he said the government needs to tackle all of the aforementioned causes in order to bring the prices down.
He further advised that NLNG should allocate enough to meet local consumption demand, up to 1.2 metric tons.
“, the impact of currency (forex) and import as well as the associated costs will be eliminated,” Ekechukwu said.
Mr. Promise Ajujumbu, an LPG retailer, said 80% of the gas consumed locally is imported.
He said gas importers and distributors have complained about the imposed VAT and difficulties in accessing foreign exchange.
“NLG only supplies 20 percent of gas for domestic consumption, while 80 percent comes from abroad.
“And because of the difficulty in sourcing foreign currency in the local market instead of getting it directly from CBN at the official price, in the end it will affect the price and also make room for adulterated gas.
“The rise started in April when a kilogram (Kg) was sold around N280 and N300 until the price is currently triggering up to N708 per Kg.
“Currently, 20 tons of LPG are sold at 9.5 million naira against 4 million naira before the increase.
“Basically Nigeria is already blessed and can produce enough gas for domestic consumption.
“If there were to be storage and exchange facilities as well as a removal of VAT, the price would drop,” he said.
Mr. John Abuchi, another retailer, urged the government to address the issues responsible for the high cost of gas.
Worried about the price going up every week, Abuchi said there had been no gain in the market since then, adding that he had suffered losses.
Ms. Shade Akpan, a gas consumer, called the continued rise in prices absurd.
She said it would be commendable for the government to find a lasting solution to the looming gas crisis in the country.
“It’s really telling on the pocket and affects the purchase of a lot of other consumables,” she said.
Another consumer, Ms. Catherine Onyeka, revealed that despite the price increase, its quality has depreciated.
Onyeka added that before the looming crisis, his 12.5 LPG cylinder, when recharged for home use, could last over a month.
She said now the gas was sold for N8,500, it could barely last three weeks.
“I also use another 12.5 cylinder for my fast food business.
“I am not happy because there is no more gain in my business.
“The expense of gas refill alone has affected production costs and customer participation is also declining,” she said.
Meanwhile, a senior Petroleum Resources Ministry official who pledged anonymity said there was a stakeholder commitment to cushion the effect of the continuing price hike.
The official said oil and gas stakeholders recently met with government officials and regulatory agencies to come up with an appropriate option to take to bring gas prices down. (www.)
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