LPG: Rise In Demand Leads To Price Hike

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By Sunday Elom

Decision by the Nigeria Liquefied Natural Gas (NLNG) to supply 100% of its Liquefied Petroleum Gas (LPG) popularly known as cooking gas may have triggered increase in the demand of the commodity, leading to a marginal price hike.

Recall that on January 13, 2022, the NLNG board of directors adopted a policy to sell 100% of is cooking gas production to the Nigerian local.

Endorsing the decision by the board of ghe NLNG, minister of state for the environment, Chief Sharon Ikeazor, last Monday said that the initiative would bring relief to Nigeria’s forests by curtailing the use of firewood and charcoal.

On Wednesday, LPG marketers told journalists that the implementation of the NLNG decision has triggered an increase in demand for cooking gas, which has in turn led to a slight hike in the price of the product.

Speaking on the current state of the cooking gas market, the national chairman of Liquefied Petroleum Gas Retailers Association of Nigeria (LPGRAN), Michael Umudu, said that although the NLNG’s decision was welcomed, it had raised some concerns in the market.

“We should be conscious this time, for after the announcement was made we recorded a slight increase in LPG price. So we have to welcome that announcement with caution,” Umudu said.

On the marginal price rise, Umudu said that “If they (NLNG) will match their words with action, it will be fine. This is because, the 100% they are talking about, will it meet the local demand for LPG?

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“Even if it meets the current demand of about 1.2 million metric tonnes per annum, which I doubt, there will be an upsurge in demand, just like we are experiencing now. Again, we should be concerned about the factor of competition.”

“This is because with the announcement, if care is not taken, some of the importers who started importing, leading to a reduction in price for about a month before that decision, may decide to stop imports believing that they will not be able to compete with NLNG.

“And if NLNG is not fit to supply the product, it can equally cause more problems. However, the decision is welcomed and the NLNG should be commended for it.”

Speaking further, he said that issues of logistics should also be addressed. He stressed that even when LPG consumption was very low about 10 years ago, there was still the challenge of logistics.

The spokesperson of the NLNG, Eyono Fatayi-Williams, had in October 2021 told newsmen that the volume of LPG produced by the firm could not meet Nigeria’s demand.

Fatayi-Williams who explained that LNG was the core product of the NLNG and not LPG had said that “The maximum amount we can now give, which is the maximum production volume, is less than what the entire country needs. We are not the only producer of LPG but we can only give 450,000MT.”

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