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Stakeholders urge LPG producers to increase market penetration ahead of global competition

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Outlook for LPG in Nigeria Source: Angus Media

With changes in the global Liquefied Petroleum Gas (LPG) market as well as growth opportunities for the Nigerian market, stakeholders in the industry have been urged to take advantage of the rising demand and production locally, as competition in the export market is expected to become intense in the coming years.

Specifically, they noted that with growth in the matured markets expected to taper, export prices must be based on market fundamentals in order to ensure that exporters fully capture market value while remaining competitive.

Speaking at the Nigeria LPG summit, themed, ‘Harmonising development and growth in Nigeria and Africa, in Lagos, yesterday, the Vice President, Yemi Osinbajo expressed government’s commitment to the development of the gas value-chain.

Osinbajo was represented by the Programme Manager, National LPG Expansion Plan, Office of the Vice President, Dayo Adeshina said people’s well-being and welfare remain a driving focus of the Federal Government.

Adeshina stated that considering the huge gas reserves in the country, there is no excuse not to develop the sector, especially when the volume of flared gas is put into perspective.

On greenhouse emission, Adeshina said: “The LPG industry plays a key role in reducing the nation’s emission through the switch from dirty fuels to LPG.

“The removal of VAT was done to ensure that Nigeria meets the five million tonnes target. The government will continue to act as an enabler in the industry. However, the key game changer will be the market structure and cylinder ownership, both of which will help to entrench safe practices in the industry.

“At the moment, there is no re-certification point for cylinders in the country and that is key in addressing issues bordering on cylinder ownership. Incentives will be provided to drive the LPG industry and this is also evident in the number of new terminals that emerging in the industry daily. We also hope to reduce emission significantly through improved adoption of clean fuel”.

The president of the Nigeria Liquefied Petroleum Gas Association (NLPGA), Nuhu Yakubu has described the growth in the nation’s LPG market as one that needs to be sustained having recorded over 1000 per cent increase, amidst rising demand.

According to him, the association will continue to consult with stakeholders to in the gas value-chain to ensure that the success recorded is sustained.

He added that return on investment is key to sustain the kind of investment recorded in the LPG sector.

Director, LPG Summit, Mrs Neasa Hapiak, noted that though LPG demand for 2019 is expected to peak at one million tonnes, the gas outlook shows that the Nigerian market will rise to about two million tonnes by 2020.

She added that one of the goals of the summit is to address how operators can take advantage of the growth and bride supply gap efficiently.

On his part, the Vice-President, Business Development LPG & Olefins, Argus Media, Alan Hayes stated that new changes in the global market may affect Africa as supply revolution led by the United States continues to disrupt the market and affect prices.

With Nigeria’s geographical location, Hayes said: “Africa sits at an interesting point – between two big trading hubs, and able to trade with multiple regions. The “logical” prices should be the lowest delivered price logistically achievable.

“More often than not, prices in Nigeria are heavily influenced by import prices. There is a real need for a pricing mechanism that genuinely reflects market dynamics in WAF – we hope that our new Index can be part of the solution”.

The Managing Director, NNPC retail, Billy Okoye stated that for the Federal Government to achieve its LPG penetration target, there needs to be an improvement in public transportation infrastructure, as it will go a long way in easing LPG distribution for the benefit of Nigerians.

“Encouraging private sector development of storage and handling facility for LPG will also boost the sector. Government backed public awareness campaigns on the benefits and advantages of LPG usage will help increase awareness and encourage more citizens to switch from kerosene and firewood use to LPG.

“Finally, providing affordable long-term financing for private sector organizations with the intention of participating in the LPG value chain will provide the much-needed stimulus for this all-important sector of the Nigerian economy”, he added.


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