The chief executive officer of Ecogas Energy Resources Limited, one of the major processors and distributors of LPG in Nigeria, Chief Shina Luwoye, FCA has revealed that import dependency and other factors are responsible for the skyrocketing prices of cooking gas in Nigeria.
According to him, sixty per cent of the Liquefied Petroleum Gas (LPG) also known as cooking gas consumed in Nigeria is imported.
Disclosing this during an interaction on Platforms Africa, he maintained that this factor, worsened by the introduction of 7.5 per cent Value Added Tax (VAT), devaluation of Naira as well as scarcity of dollar, were responsible for the surge in the prices of the product.
Expressing concerns over the high price, Luwoye maintained that Ecogas has steadily pursued LPG adoption and penetration within the localities of her gas refilling plants and has aggressively pursued cost and margin cutting measures aimed at making the product more available and affordable in its catchment areas. The company currently serves up to 500, 000 families on a monthly basis.
He said: “The federal government’s efforts to deepen adoption of LPG have been yielding results. We can boldly see this through the high demand for the product. Even my aged mother who hitherto forbids her tenants from using cooking gas now uses LPG for cooking. The gains we have recorded, which now make more people demand for gas shows that we have done well as a country in terms of gas.
Unfortunately, the recent uncontrollable north pole movement in LPG market price curve is a major threat to the domestic LPG market.’’
What we are now experiencing with gas also has elements of general price increase / inflation in Nigeria that is affecting the nation in general and other petroleum products. And, because just 40 per cent of demand for LPG is being supplied locally while 60 per cent is sourced through importation, a lot of other external factors have come to affect the price.
Chief among these is the 7.5 Value Added Tax (VAT). The NPSC LPG terminal at Apapa had played salutary roles in bringing down the price of LPG for many years. This critical facility with 8000MT capacity has been unproductive for over six months because of a protracted maintenance that could have taken private sector to carry out in less than 30 days. Apart from losing over half a billion naira revenue, the unavailability of the facility has marginally contributed to the price increase.
“The devaluation of the Naira is another cause of the cooking gas price surge, forex (foreign exchange) is another. The amount of dollar inflows is far less than outflow and this shortage has become a serious issue for importers of the LPG who need dollars to effect their importation business,” the helmsman for Ecogas Energy Resources Limited declared.
Debunking insinuations that marketers of cooking gas are profiteering, Luwoye maintained that on the contrary the businesses of the marketers and off-takers are at risk.