Over $10billion will be generated for the economy from the switch of 50 per cent kerosene and firewood users by 2019, according to the Nigerian Liquefied Petroleum Gas Association (NLPGA).
The group added that an estimated 500,000 to 1,000,000 jobs would also be created in the LPG value chain within the next two years with the planned Kerosene to LPG switching programme.
NLPGA’s Executive Secretary, Joseph Eromosele, therefore advised investors/operators in the Liquefied Petroleum Gas market in the country, to tap into the over $10 billion investment opportunities to be unlocked by the national LPG policy of the Federal Government.
Eromosele made this remarks at the Chief Executive Officers’ Breakfast Meeting held recently in Lagos, where LPG producers, marketers, IFC, UBA, Sterling Bank and other stakeholders brainstormed on the investment opportunities that are expected to be catalysed by the national LPG policy.
In his opening speech, he explained that the overall goal of the LPG policy is to promote the wider use of LPG in domestic, power generation, autogas and industries, while increasing national consumption to five million metric tonnes in five years.
According to him, over $10 billion can be generated if 50 per cent of the current kerosene and firewood users in the country switch to cooking gas by 2019. This, he added, offered huge investment opportunities for LPG players.
He said, “Only five per cent of the Nigerian population utilises LPG for cooking while 56 per cent depends on firewood and 27 per cent on kerosene. Over 30 million households and more than 100 million Nigerians depend on firewood as a source of energy for cooking but this has come with collateral damage to human health, environment (deforestation) and the economy. With the LPG policy, we will be able to drive broader penetration of LPG into homes, especially the low-income households in rural areas.”
According to the Deputy President, NLPGA, Nuhu Yakubu, the policy also aims to use LPG to displace LPFO and diesel as popular fuel among industrial users while deepening applications in agriculture and commercial establishments.
“The policy will also promote the use of LPG for off and on grid power generation. It will provide the environment for the use of LPG in the automotive industry with a target conversion of 10 per cent of the country’s vehicle population. These are investment opportunities for industry stakeholders,” he added.
Similarly, the Programme Manager, National LPG Expansion Implementation Plan (Office of the Vice-President), Dayo Adeshina, decried that 18 states in northern Nigeria are currently suffering from desertification and deforestation because several millions of the citizens rely on firewood for cooking.
If the situation continues unchecked, Adeshina warned that states in the southern part of the country could soon start experiencing deforestation, a development he said shouldn’t be allowed.
He, therefore, noted that only increased utilisation of LPG could halt deforestation, which is fast encroaching into new areas of the country.
Adeshina added that to deepen LPG usage, more investments were needed in local gas cylinder manufacturing and urged NLPGA members to begin to look at the direction especially with a national LPG policy now in place.
He decried the shutdown of two cylinder manufacturing plants in Nigeria, adding that some investors had signified interest in manufacturing cylinders in-country.
CEOs present at the breakfast meeting noted that though the nation’s total domestic LPG consumption had grown from just below 70,000 tonnes in 2007 to 500,000 tonnes in 2016, the improvement in the domestic consumption of LPG only translated to a per capita consumption of only less than 2.5kg. This, they said, was low compared to the per capita consumption in selected African countries like South Africa at 7.28kg, Ghana at 9.45kg, and Morocco at 66.27kg.
Some factors responsible for this as identified by the CEOs include the massive inadequate supply of LPG equipment, high cost associated with the acquisition of cylinders and LPG stoves, insufficient number of jetties and LPG inland storage facilities, excessive import duties and VAT on LPG equipment, and inadequate road and transport network facilities.
They also complained about the lack of access to long-term funds for LPG project in the country while blaming the banks in this regard.
However, representatives of some of the banks at the meeting enlightened the LPG operators on what they needed to do to attract funding from the banks.
All the stakeholders at the meeting expressed confidence that the LPG policy would spur a revolution in the LPG industry and urged the government to ensure that the policy is fully implemented to the benefit of all and sundry in the country.
