Wednesday, 27th September 2023

FG projects rise in LPG consumption as price soars

By Kingsley Jeremiah, Abuja
18 December 2019   |   2:37 am
The Federal Government, through its downstream regulator, Petroleum Products Pricing Regulatory Agency (PPPRA) linked the recent increase in the price of Liquefied Petroleum Gas...

The Federal Government, through its downstream regulator, Petroleum Products Pricing Regulatory Agency (PPPRA) linked the recent increase in the price of Liquefied Petroleum Gas (LPG), otherwise called cooking gas, on attacks launched against some vessels.

Though the agency noted that the LPG market is deregulated and functions on the realities of demand and supply, stakeholders at the agency, in the course of the week, in Abuja, blamed the current increase in the price of cooking gas on attacks of vessels by pirates.

The Executive Secretary of the Agency, Abdulkadir Saidu had similarly said local consumption of witnessed a quantum leap from 1.8 kilogram per capital in 2015 to 4.4 kilogram this year, adding that LPG consumption would double from 400,000 metric tonnes to over 800,000 metric tonnes before the end of 2019, thanks to new policies aimed at encouraging use of cleaner energy sources.

PPPRA equally disclosed that the Federal Government has removed Value Added Tax (VAT) on LPG to increase its penetration, while taken strategic steps to address the challenges in the value chain.

While Nigeria is reportedly a fast a fast-growing market for LPG, 600,000MTPA of LPG was said to be consumed in 2018, through approximately 15,000 retailers, trading 1,500,000 units of LPG cylinders and serving 1,500,000 households which makes up only about five per cent total households in the country.

However, General Manager, Gas and Renewable Energy at PPPRA, Olasupo Agbaje said a coordinated approach is being chaired by the agency to urgently address the limitations facing LPG penetration in the country, including rolling out cylinders and other interventions that would encourage the masses to use cooking gas.

In the absent of cleaner cooking options, over 70 per cent of households in Nigeria use firewood, a development which has post challenge to deforestation, climate and leads to the death of over 93, 000 Nigerians yearly, according to the International Centre for Energy and Environmental Development (ICEED).

PPPRA had noted that government would encourage domestic gas utilisation through deepening liberalisation of domestic supply source, addressing domestic shipping logistics that encourage import over local production, addressing the issue of levies and taxes on LPG equipment, ensuring semi urban and rural penetration and sustained policy intervention in supply and distribution architecture.

The agency further disclosed that while Nigeria Natural Gas Production as at December 2018 stood at 44.25 billion cubic metre, less than 25 per cent of the quantity is utilized domestically while about 80 per cent is exported.

Saidu said some of the challenges confronting domestic LPG utilization are: infrastructure deficit which include, limited pipelines, inefficient and lopsided distribution system, funding limitation, low demand, low incentive regime, high starter pack cost, pricing issues, unsafe cylinder population, and absence of conversion facilities.

Others are storage and jetty limitations/constraints, limited shuttle or supply vessels, high risk of LPG utilisation, low level of awareness and sensitization, abysmally low auto gas utilization, high cost of conversion, kits etc.

The regulator also noted that government policy for the sector in Nigeria is to ensure the development of a strong and rapidly growing LPG market in the country, adding that government is addressing these issues by ensuring infrastructure challenges are addressed, import jetties are opened up to enable third party access, port clearance is improved and entry cost for consumers is minimized.