Stakeholders Express Fears Over LPG Supply Instability, Fear Price Hike

Samuel Mobolaji

Key stakeholders in the midstream sub-sector of the oil and gas industry have expressed fears that increasing demand for Liquified Petroleum Gas(LPG) also known as cooking fuel, which has widened supply gap may cause further price disruption in the country.

The executive secretary, Nigerian Association of Liquefied Petroleum Gas Marketers (NALPGAM), Mr Bassey Essein,

in a chat with our correspondent said, data is showing exponential rise in consumption which currently is leveling up to about 1.8 million metric tons.

Essien noted that this is far above about 150,000 metric tons as at 2007, even while 50-55 per cent of LPG consumed in the country is imported.

This, he stressed, was the reason for wide cost variance occassioned by exchange rate volatility, multiple taxes, scarcity of foreign exchange, among others.

He said, the Nigerian Liquified Natural Gas(NLNG) Limited, though has provided a significant supply support, however, the volume is not enough to satisfy local consumption.

Essien also blamed lack of investment in infrastructure as another issue affecting the domestic supply.

He said, although the price of cooking gas was still high, when compared to the price sold last year, but had remained stable since the beginning of the year.

According to him, the source of LPG for sometime now has been predominantly from the Nigeria LNG and has never met the demands.

This, he added, is because of the supply- demand gap and market dynamics and all these work in concert to affect the price.

He called for more investment in gas processing sector in the country and urged the Federal Government to grant investors the necessary incentives that would encourage such.

“Remove taxes and tariffs on gas. Grant other incentives that attract investors. The penalty for gas flaring l learnt has been increased. Maybe it will work because if a company recognises the penalties paid on these, it might encourage the worthwhile investment in gas processing,” he added.