Fear of cooking gas scarcity looms over new pricing directive

Petrol

THERE is growing anxiety that the recent directive by the Petroleum Products Pricing Regulatory Agency (PPPRA) that the stakeholders and off-takers of Liquefied Petroleum Gas (LPG) also known as cooking gas, should surrender their pricing templates could create supply hitch and therefore, scarcity in the market.

The planned regulation of the pricing template was described by stakeholders as a policy that could cause a setback for the nationwide quest for optimal utilisation of the product that is yet to attain its full potential in Nigeria.

The Guardian gathered that the PPPRA has already written letters to some LPG off-takers and plant owners requesting full disclosure of their pricing template to hasten its plan.

The fear is that since the two other major products, currently under the regulation of the agency – the Premium Motor Spirit (PMS) known as petrol and Dual Purpose Kerosene (DPK) known as kerosene – are frequently scarce, bedeviled by hoarding, profiteering and ineffective price monitoring and enforcement, the same anomalies could be transferred to the LPG market through the new policy.

The Executive Secretary of PPPRA, Farouk Ahmed is said to have personally signed the letter requesting LPG off-takers to share their pricing template with the agency.”

But the highest body of LPG off-takers and stakeholders, the Nigeria Liquefied Petroleum Gas Association (NLPGA), has reacted, saying the PPPRA should rather prove its relevance in the industry in some other way, noting that the regulated petrol and kerosene markets are characterised by price manipulation and other shady deals.

“The NLPGA does not argue with the authority of PPPRA, but however wishes to address our proposed intervention that: NLPGA cannot find any relevance of PPPRA at the moment, considering that LPG market is fully deregulated, and subject to forces of demand and supply,” the association said in a statement.

It added: “Another thing is that if PPPRA wants to develop its pricing template for LPG, it may as well go ahead to do that, without necessarily requesting input from LPG operators, who by themselves, each developed their respective pricing templates.

“PPPRA should prove its relevance, considering that petrol and kerosene, both products under the complete regulation of PPPRA do not deliver to the common man at the government regulated (subsidized) prices,” it stated.

Most of the LPG off-takers declined to make personal comment when contacted for fear of being tagged to be in confrontation with the government agency but one of them who craved anonymity confirmed that the PPPRA sent a letter to them.

This move, the source said, might lead to price fixing for LPG which is a deregulated product and draw back the efforts by government and other stakeholders to promote usage of LPG.

The PPPRA demand for stakeholders’ pricing template is, according to him, a surprise to many in the industry given that the immediate past president of PPPRA, Reginald Stanley, in an industry stakeholders meeting in Abuja in December 2013, stated categorically that the PPPRA ‘has no business regulating LPG.’

“Let them go ahead with indexes but the effect is that this may be a way of slowing down the industry, which has for years been struggling to blossom,” he said.

He continued: “We welcome the intervention of the PPPRA in the LPG industry. It’s just that we do not see the relevance of their trying to get us disclose our pricing template.”

“This product is a deregulated commodity and any attempt to get its price regulated will create distortion in the smooth chain of demand and supply in the country,” he argued.

Spokesperson for the PPPRA, Lanre Oladele, could not be reached for immediate clarifications, but a source at the PPPRA said: “There is a move to get a pricing template for LPG. Of course, series of letters have been written to some LPG off-takers requesting them to furnish the agency with their pricing template, which will be used to benchmark the price. The agency depends heavily on Part II, Section 7, of the PPPRA Act, which confers this as one of the statutory functions of the agency.

“We are empowered by the said Act to determine the pricing policy of petroleum products and to maintain constant surveillance over all key indices relevant to pricing policy and periodically approve benchmark prices for all products.

“What we are doing is to establish an information and data bank through liaison with all relevant agencies to facilitate the making of informed decisions on pricing policies.