Spike in LPG prices blamed on global demand, supply gaps
Some industry players have blamed the continuous increase in price of Liquefied Petroleum Gas (LPG), commonly known as cooking gas, on international factors rather than demand due to the Yuletide holidays.
According to them, the recent hike in gas prices and temporary scarcity is as a result of the power of supply and demand in the international market.
A contact from Navgas who spoke with The Guardian noted that since LPG is not regulated in the country, prices would continue to be weighed by the western countries, as individual investors have to make their profit.
The source added that consumers shouldn’t think prices are affected because of the festivities, for they would only drop when demand and supply is balanced in the international market.
The Guardian gathered that some gas stations were out of supply at the weekend, and prices have continued to hike, as most gas filling stations now sell 6kg and 12kg gas cylinders for an average of N2,000 and N4,000 respectively.
The temporarily scarce commodity, which used to sell at N1,400 and N3,500 for 6kg and 12 kg cylinder bottles respectively, now sells for an average of N2,300 for 6kg and N4,400 for 12kg at some roadside micro gas sellers’ outlet.
Evidently, the National Bureau of Statistics (NBS), in its LPG price watch for November 2019, stated that the average price for refilling a 5kg gas cylinder increased by 1.67 per cent month on month and decreased by -4.05 per cent year on year to N2,000.29 in November 2019 from N1,967.46 in October.
Similarly the price for refilling a 12.5kg cylinder increased by 0.40 per cent month-on-month and decreased by -2.85 per cent year on year to N4,121.15 in November 2019 from N4,104.83 in October.
The Executive Secretary of the Nigerian Association of Liquefied Petroleum Gas Marketers (NALPGAM), Bassey Essien, who also shared the view of prices being affected by the international market, told The Guardian that Nigeria LNG (NLNG) supplies only 13,000MT to Navgas, NIPCO and PPMC, in Lagos, and the rest is imported by individual investors who are exposed to foreign echange problems and price differentials in the international market due to the high gas demand during the winter season.
Bassey in chat with The Guardian advanced that the combined capacity of Navgas, NIPCO and PPMC is about 26,000MT, so obviously for this to be utilised, NLNG’s supply vessel to Lagos would have to increase its frequency, else, there would be continuous inconsistent supply and ultimately temporary scarcity and price hike.
He was however quick to note that the situation for him, was not a yardstick to judge a large LPG conversion in the country, noting that even though conversion rate hovers around 700,000MT this year, “scarcity should not be seen as improved usage.”