A Review of the Nigerian Energy Industry

Months after NLNG-NIMASA row, cooking gas price still high

cooking gas17 September 2013, Lagos – Exactly two months after the Nigerian Maritime Administration and Safety Agency, NIMASA, lifted its blockade of the Nigeria Liquefied Natural Gas, NLNG, thus normalising the supply of liquefied petroleum gas, LPG, otherwise known as cooking gas, to the Nigerian market, the price of the commodity is yet to return to normal.

NIMASA had on June 21, 2013 blocked the Bonny Island waterways, preventing NLNG vessels from exporting LNG and supplying LPG to the domestic market over unpaid levies.
It was gathered at the weekend that LPG of 20metric tonne is still selling at N3.4million, against the N2.7million it was sold before NIMASA mounted its blockade.

Speaking on the issue, the national President of the Nigerian Association of Liquefied Petroleum Marketers (NALPGAM), Mr. Basil Ogbuanu, told THISDAY at the weekend that the current crisis in Syria was responsible for the inability of the price of cooking gas to return to normal.

He said the cooking gas sold in Nigeria was priced internationally in the same way crude oil was priced.
“LPG is priced internationally. If the price at the international market was $100 four days; $90 three days ago; $130 two days ago and $100 a day ago; the price today is the average price for the four-day period.

That is how the price of LPG is determined in Nigeria, even though supply to the domestic market comes from the country” he said.
NIMASA’s blockade had led to a hike in the price of cooking gas in the country as NLNG is the sole supplier to the domestic market, supplying 150,000metric tonnes yearly.

For instance, 20metric tonnes of LPG, which was sold at N2.7million before the blockade, went up to N4.6million, with 12.5kilogramme cylinder selling at N4, 500 against the normal price of between N2,800 and N3,000.

However, after it had lost huge revenue to the blockade, the NLNG agreed to pay to NIMASA, on an “under protest” basis, various levies which the maritime regulator claimed were overdue statutory payments by NLNG.

The total levies involved amounted to $140million as claimed by the maritime regulator after NLNG had made an initial payment of $20 million. 
With NLNG’s agreement to pay the levies, NIMASA lifted the blockade of NLNG ships, restoring the shipment of LNG cargoes and the supply of LPG to the domestic market.
In continuing its commitment to re-create a domestic LPG industry in the country, NLNG subsequently increased the quantity of LPG supplied to the Nigerian market to 250,000 metric tonnes, up from 150,000 metric tonnes.

According to the company, “the 67per cent increase will enable ample stock of the alternate fuel and promote the use of cooking gas – necessary for its salutary effects on the environment, including its role in controlling deforestation”.

But two months after the resolution of the NLNG-NIMASA crisis and the subsequent increase in domestic supply, the price of the product is yet to normalise.

– This Day

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