‘Why Cooking Gas Price Has Not Crashed in Nigeria’

The President of the Nigerian Liquefied Petroleum Gas Association (NLPGA), Mr. Dayo Adeshina has explained that the price of Liquefied Petroleum Gas (LPG), better known is cooking gas has not crashed to the expectations of Nigerians because infrastructural challenges have hindered the plan by the Nigeria LNG Limited to bring one LPG vessel from its Bonny Island plant in Rivers State and discharge in Lagos every week.

Adeshina has also explained the use of ‘Mont Belvieu’ international pricing model for LPG by the NLNG, saying that when the Bonny Island plant was set up, the project economics was based on export LNG market as LPG is only a by-product.
He, however, clarified that Nigerians pay lower price for LPG than gas consumers in Germany, United States and elsewhere, since shipping LPG from Bonny to Lagos is cheaper than shipping it from Bonny to Germany or Bonny to the US.

“That freight is at a discounted price. That is why I said that you are not paying the same price with people in Germany because if you are paying the same price as Germany, the LPG price in Nigeria will be much higher,” he said.

Adeshina told THISDAY in Lagos at the weekend that despite the efforts by the NLNG to increase the volume of LPG allocated to the domestic market from 250, 000 metric tonnes yearly to 350,000 metric tonnes, the retail price is yet to crash to the bottom because only one vessel was being discharged in a monthly basis as a result of lack of berthing space.

He noted that it was only recently that NLNG was able to discharge two vessels in a month, adding that this feat is still below the one discharge- per week target.
“The infrastructure challenge I am talking about is in the area of discharge of LPG. When NLNG designed this programme, it was designed in such a way that there would be one discharge in a week. Now, at best in the past, we have one discharge in a month. It was only recently that they were able to do two discharges in a month but we need to go back to one discharge in a week or even two discharges in a week, if it is possible. That is when we can achieve that price reduction that we are looking at because with that, there will be more players will come into the business; more coastal terminals will be required,” Adeshina explained.

He said with the new LPG terminals that would soon come on stream in Calabar, Lagos and Port Harcourt, coupled with the efforts being made by stakeholders to rehabilitate the BOP and PWA jetties in Lagos to complement the NOJ jetty, the infrastructural challenges would soon disappear.

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