Reasons for the Hike in Hrice of Cooking Gas
The price of cooking gas has skyrocketed over the last six months. The product sells for N450 per Kg in most part of Nigeria. In Lagos for instance, a 6kg cylinder now costs N2,400 to fill, while a 12.5kg takes N5,200 to fill.
Nigeria is the largest gas producer in Africa and a major supplier to the world. According to the Department of Petroleum Resources (DPR), Nigeria’s proven gas reserve stands at 203 trillion cubic feet. This begs the question, why is cooking gas very expensive in Nigeria?
The persistent hike in the price of cooking gas has to do with several factors. First is the inability of the Nigeria Liquefied Natural Gas (NLNG) to supply enough quantity of LPG to the Nigerian market. NLNG boasts of producing over 4 million metric tonnes of LPG per annum. But it supplies only 300,000 metric tonnes to the Nigerian market. The average annual consumption of cooking gas by Nigerians is 1.5 million metric tonnes. This means that marketers now import the shortfall of 1.2 million metric tonnes to meet local demands. The concern here is that NLNG exports about 3.3 million metric tonnes to meet their international obligation, and to earn foreign currency. It appears that the focus of the NLNG on exports has negatively affected the need to satisfy their domestic obligation. It is important to note that NLNG is co-owned by three International Oil Companies called IOCs.
The reliance on importation of cooking gas to meet local demands is not just the problem. There are other factors that have driven prices high. For example, the high cost of foreign exchange. The dollar has continued to gain strength over Naira. There is also the issue of multiple administrative levies marketers pay to government agencies. Consequently, these charges are transferred to consumers.
What the government should do to help Nigerians is to compel NLNG to increase their supply to the local market. They have to consider the plight of average Nigerians. If they increase local supply to at least 800,000 metric tonnes per annum, the price of cooking gas will fall drastically.
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