The Price of (LPG) Cooking Gas rises sharply again in Nigeria

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  • Author: Muyiwa Ige(LPG Stakeholder and Consultant)

The season of high cooking gas prices seems to have arrived unusually early this year 2023, with the consistent rise in the price of Cooking Gas (LPG) being witnessed in the country, in the past few months.

Typically, the price of cooking gas rises in Nigeria, as well as around the world, from November-March during the period some Western and Asian countries of the world, experience the winter season. 

The increase in the price of LPG around the November-march period is largely attributable to demand-supply dynamics, which occurs when the demand for cooking gas for heating needs in Western Countries during the winter season substantially outweighs its global supply.

But when the price of cooking gas in August is already approaching/or at the level, of the winter season peak price of the last year, then the situation calls for some serious concern.

The price of 20 metric tons of LPG(Cooking Gas) suddenly rose from N10,600,00-N11,000,000 on the 8th of August,2023,  to N11,500,000-N12,000,000, on the 9th of August, 2023, at the LPG Depots in Lagos, Port-Harcourt and Warri.

This recent hike in the ex-depot price of LPG has been narrowed down to these factors:

1.      An upsurge in the importation of the product, as a result of increasing demand, which has outpaced the local supply.

2.      Rise in the international price of the product.

3.      Devaluation of the naira, which has made the cost of securing forex for the importation of LPG very high.

4.      High freight rates for LPG cargos.

5.      Increase in the rates of import duties and related port charges.

6.      The high cost of diesel, and  the rising cost of procuring and maintaining the LPG equipment and other facilities, used at the LPG depots.

At the current ex-depot rate of LPG, the retail price of 12.5kg of gas is now expected to range between N8,750 -N11,000, across the country, depending on the proximity of the location to the nearest LPG depots.

Without any shadow of doubt, any further increase in the retail price of cooking gas at this period will lower the demand for the product in the country, which will lead to an undesirable situation where people fall back to firewood, charcoal, sawdust and public power(with some resorting to illegal connections, to the detriment of the Power Companies.)

Therefore, all hands need to be on deck to mitigate the sustained rise in the price of cooking gas in the country, in order to enhance the fortunes of the industry.

The government can take the lead by removing import duties for cooking gas and LPG equipment, whilst putting in place irresistible incentives to attract companies that want to set up LPG processing Plants in the country.

LPG Depots can also team up to acquire large LPG carriers that can bring in huge volumes of the product for economies of scale, to reduce the landing costs of the product in the country.