The Tinubu Presidency and Nigeria’s Cooking Gas (LPG) Industry

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  • Author: Muyiwa Ige(LPG Stakeholder and Consultant)

Niglpgas.com joins other well-meaning Nigerians to effervescently congratulate the President-elect, His Excellency, Asiwaju Ahmed Tinubu, on his victory at the polls.

Niglpgas.com fervently prays that the Almighty GOD will grant him good health and make his tenure a huge success in Jesus name.

Although there’s no doubt that some decent progress was recorded in Nigeria’ LPG industry during the current administration- which is winding to a close, there’s still a lot to be done to steer the nation’s cooking gas industry to the ‘promised land.’

Below are some of the cogent points of concern/problems responsible for the stunted growth in Nigeria’s LPG Industry, which the incoming Tinubu administration needs to look into and address to place the industry on the path of sustainable growth:

·         1. More than 50% of Cooking Gas (LPG) cylinders in circulation in the country are old/expired/substandard. These expired cylinders have been responsible for fire incidents in some homes across the country.

·         2. The high retail prices of cooking gas (N700-N900 per kg, depending on the location) is discouraging its widespread usage and adoption in the country.

·         3. Prices of cooking gas cylinders and burners are high and beyond the reach of low-incoming earning Nigerians.

·         4. VAT and Customs duties on imported LPG cargoes result in increases in the ex-depot and retail prices of cooking gas in the country. VAT and rising Custom duties on imported LPG tanks and equipment, invariably sustain the upward movement of cooking gas prices.

·         5. The in-country production of LPG is grossly inadequate and only satisfies about 40% of the national demand. The larger percentage of LPG consumed in the country, which is imported, is a major cause of high cooking gas prices in the country.

·         6. Unavailability of rail transportation to move LPG cargos from the coastal LPG Terminals to the hinterland (most especially, the northern parts of the country that have no coastal LPG Terminals) increases the landing cost of cooking gas and automatically raises its retail price.

·         7. Low draught at some of the nation’s ports, which makes them unable to receive large LPG carriers, increases the landing cost of cooking gas.

·         8. Insufficient coastal and in-country LPG storage facilities, invariably leads to increased landing cost of the product. (Explanation can be made on request.)

 Six measures the Incoming Tinubu Administration need to take for the industry’s growth

 1. Approach indigenous LPG Cylinder manufacturing companies like Techno Gas and Rungas, and subsidize the production of at least two million units of gas cylinders. A 6kg cylinder which currently goes for N15,500, can be subsidized to the rate ofN6,000. This has twin benefits: it will create jobs in the cylinder manufacturing plant and make cooking gas cylinders affordable for Nigerians; thereby boosting the national consumption of the product and enhancing the economy. An added benefit is that it will drastically reduce the population of old/substandard/expired gas cylinders.

·         2. Expand the national rail network to connect all the major cities and towns in the country. The incoming government should invest in LPG tank cars for cost-effective inter-state freight of LPG cargos to reduce the landing cost of the product across the country.

·         3. Encourage and incentivize the private sector to build in-country LPG Storage Depots that are connected by rail and pipeline, to the coastal LPG depots/ Production Plants.

·         4. Provide infrastructural and security support, as well as offer mouth-watering incentives such as tax holidays to firms willing to invest in onshore and offshore gas gathering and LPG Production plants.

·         5. Dredge water channels at the ports nationwide that have low draught to allow large LPG vessels to make port calls. This will give the recipients (LPG Depot owner or Off-taker) the economies of scale advantage that will make it possible to sell at lower prices to buyers (LPG Plant owners, Industries etc.

·         6. Allow only LPG Industry players and investors to be made NLNG Off-takers.

Conclusion          

Niglpgas.com firmly believes that the implementation of these interventions will make Nigeria’s annual LPG consumption, which currently stands at between 800,000 – 1,200,000 Metric Tons, to rise substantially to over 2,500,000 Metric Tons per annum, within three years of the Tinubu administration.

Niglpgas.com, therefore heartily pumps ‘8,794,726 Metric Tons of goodwill’ to the incoming president Asiwaju Ahmed Tinubu, to support his quest to take the LPG industry and the whole country, to its glorious destination.