The trending astronomical increase in the price of Liquefied Petroleum Gas (LPG) known as cooking gas, no doubt is troubling; considering that Nigeria, as an oil-producing country, harbours vast quantity of natural gas that can be technologically converted into cooking gas. What it means again, is that Nigerians are in serious want in the midst of plenty of resources. The situation has further cut deep into their pockets and consequently increased the economic hardship they are going through.
A cursory survey of market prices reveals a year-on-year basis on the increase in cooking gas. In December 2023, a 5kg cylinder of gas sold at N4,962.87, it rose to N5,139.25 in January 2024 causing many families to discontinue the use of gas for other alternatives. The average retail cost for refilling a 12.5kg cylinder of cooking gas saw a year-on-year rise of 12.31 per cent, rising from N10,248.97 in December 2022 to N11,510.16 in December 2023. This is according to the National Bureau of Statistics, latest cooking gas price watch for December 2023 and January 2024.
The effect of high price of cooking gas is a double edge sword, affecting the consumers as well as the dealers. No doubt, the high price of cooking gas will inevitably further force the average citizen to look for alternative means such as firewood and charcoal, a development that will put a clog in government’s programme encouraging the use of gas in order to stop deforestation.
For a country with over 203 trillion cubic feet (TCF) of proven gas reserves, about the 9th in the world and about 600 trillion cubic feet of potential gas reserves which could last for centuries if optimally harnessed; it is sad that Nigeria is unable to exploit this advantage for economic and social prosperity. Lack of political will on the part of government, and low investment in the sector are partly responsible. It is equally disturbing that all efforts by the government to tame the skyrocketing price of LPG have failed due to factors ranging from low domestic production, high operating cost of gas plants to wrong-headed importation policy. In November last year, the Federal Government’s insatiable taste for anything foreign made it give exemption of imported LPG and its related equipment from paying customs duty and 7.5 per cent Value Added Tax (VAT), as a means of crashing the rising prices of cooking gas. The concession backfired mainly because of high fluctuation of the dollar to the naira. Prices of cooking gas went even higher, putting the already financially pressed Nigerians under more intense pressure.
Nevertheless, the skyrocketing price in cooking gas and the suffering the people are enduring are in no way justifiable. Aside the consumers’ agony, the dealers are not left out in the orgy of lamentation as gas companies attributes the rise in price to high foreign exchange and the cost of transportation of the product. According to a gas company chief executive, Promise Ajujumbu, 20 tonnes of LPG rose from N9 trillion to N19 trillion due to several factors, among which are forex exchange, very low local production and high cost of diesel for transportation of the product across the country. Currently, diesel is sold at N1,300 per litre, and for a truck to transport gas from Lagos to Abuja it needs about 1,000 litres.
Also, Ajujumbu lamented that in gas filling stations, diesel is being used to power the plant for over 12 hours to dispose gas to customers. He concluded by saying: “The cost at which the end users are buying gas currently is just the surviving cost of the gas plant because dealers are selling at a loss and only sell to maintain their customers.’’
Regrettably, this is the same gas that is flagrantly flared in the oil bearing region causing pollution, environmental degradation and economic losses to government. The question therefore is, when would the Federal Government seriously harness the nation’s God-given natural resources? It is unacceptable that, even at this critical period that the country is in dire need of forex, the Federal Government is yet to put in place necessary incentives and legislative backing as well as infrastructure to end gas flaring. It is shocking to note that the government keeps shifting the deadline to end gas flare in the country and over the years, had become the biggest gas flarer as she flared four times the volume of natural gas burnt by Saudi Arabia.
According to data from the National Oil Spill Detection and Response, between January to November 2022, Nigeria flared 5.6 billion standard cubic metres of gas valued at 685 million dollars. The country reportedly lost 1 billion dollars, an equivalent of N891 billion, to gas flaring in one year. And oil companies operating in the country burnt 275.2 billion standard cubic feet (SCF) of gas in 2023. While gas flare penalty stands at 2 dollar per 1,000 SCF for oil companies producing more than 10,000 barrels per day and 0.5 dollar for companies producing less than 10,000bpd per day. This is reckless and unpardonable.
The Federal Government being the arm in charge of oil and gas affairs, should wake up to its responsibility and stop gas flaring in the country, as well as provide the basic infrastructure to harness the country’s large gas reserves and make the product available for local consumption. It is ironic also that cooking gas is being exported when domestic consumption is inadequate.
According to the Minister of Petroleum Resources (Gas), Ekperikpe Ekpo, the Federal Government is considering halting the export of cooking gas, to slow down the escalating prices of the product. It is important to note that the Nigerian market is vast and dynamic and with over 200 million people, it should be able to generate enough consumption for massive investment on cooking gas. Therefore, the Bola Tinubu administration should do the right thing for Nigerians to be relieved in their cooking.
