A Review of the Nigerian Energy Industry

Marketers seek Petroleum Minister’s Intervention in LPG crisis

23 September 2014, Lagos –  Marketers of the Liquefied Petroleum Gas (LPG), otherwise called cooking gas, under the aegis of Nigerian Association of LPG Marketers (NALPGAM) has appealed to the Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke to intervene and reverse the recent hike in the price of the product by ALGASCO LPG Services, one of the companies, whose facilities were licensed to lift the product supplied by the Nigeria Liquefied Natural Gas (NLNG) Limited.

The marketers expressed concern that the hike in price by ALGASCO at its Navgas terminal at Apapa, Lagos, without any justifiable reason would threaten the recent boom in the LPG market and erode the gains recorded over the years.
The marketers alleged that Algasco increased the price of 20 metric tonnes from N3.3million to N3.5 million, thereby creating instability that would potentially raise the price of N12.5 kilogramme cylinder from N3,000 to over N4,000 at the retail outlets.

cooking gas

ALGASCO markets LPG at its Creek Road terminal in Apapa, Lagos, which is operated by Navgas.

The President of NALPGAM, Mr. Basil Ogbuanu and the Executive Secretary, Mrs. Makinwa Omoyemi  said at the weekend that the price hike would wipe out the gains recorded in the LPG market since the intervention of NLNG in 2007.

“Nigeria LNG Limited, in conjunction with the Federal Government’s intervention in this scheme has ensured the availability of this product and stability in pricing. Since the beginning of this year, the price has been between N3.1million and N3.3million per 20 metric tonnes. The only time we have this kind of crisis is any time this particular terminal is the only one that has gas. It happened sometimes in December 2012, when they hiked the price from N3.2 million to N4.6 million. We have three terminals in Lagos and they are the only one among the three that has gas now. Before now, they did not have gas and the other two terminals that had gas were selling between N3.250 million and N3.3 million. But when the other two terminals ran out of gas and they are the only people that received 8,000 metric tonnes on Monday, just about few hours ago. They are now creating unnecessary scarcity and making the price to jump up at the detriment of the Nigerian people and the LPG scheme by the federal government and the NLNG,” Ogbuanu explained.

He accused Algasco of always creating instability in the system, adding that the company is “notorious for increasing price anytime its terminal is the only one that has product in Lagos”.

Ogbuanu also displayed a text message allegedly sent by ALGASCO, inviting the marketers to come and buy at N3.4 million before they suddenly changed the price to N3.5 million without any justifiable reason.

He insisted that there was no basis for the hike, since NLNG has not increased the price of the product.

Ogbuanu appealed to the Minister of Petroleum and the Minister of Transport to intervene and ensure that the company reverses the price.

Omoyemi, on her part, stated that if Algasco is not made to reverse the price, the price of 12.5 kilogramme cylinder will jump to over N4,000 at the gas plants or even higher.
But in a swift reaction, a female official at Algasco, who spoke to THISDAY on condition of anonymity, described the action of the marketers as a “gang-up” against her company.

The official blamed the increase in price on the increase in the Mont Belvieu LPG price, which is the international pricing model used by the NLNG Limited to sell gas to the domestic market.

On the text message her company was said to have sent to the marketers to come and buy at N3.4 million, the official noted that the text message might have been sent when her company had not properly evaluated the cost implications of bringing the product to the terminal.

According to her, it was after a proper cost assessment that they arrived at N3.5 million, instead of the N3.4 million initially promised.

She stated that the Mont Belvieu LPG price at the international market had increased from $563 per metric tonne on September 1 to $576 as at September 15.
She also debunked the claims by the marketers that the other off-takers had sold product at N3.3 million before her company received product and started selling at N3.5 million.

According to her, the other companies had sold at N3.4 million, adding that his company only increased the price from N3.4 million to N3.5 million due to the increase in Mont Belvieu at the international market.

She identified the other companies, which had sold at N3.4 million before NLNG brought product to her company’s terminal to include NIPCO Plc, Pipelines and Products Marketing Company (PPMC), a subsidiary of NNPC and Total Nigeria Plc.
However, sources within these companies told THISDAY that contrary to her claim that these companies sold at N3.4 million, they actually sold between N3.250 million and N3.3 million before their LPG stock was exhausted, prompting Algasco to hike the price to N3.5 million.

Following the acute scarcity of the product in 2007 due to the collapse of the refineries, former President Olusegun Obasanjo had directed NLNG to set aside part of its LPG output for the domestic market.

The company had initially committed 150,000 metric tonnes yearly to the domestic market, which was later increased to 250,000 metric tonnes for the domestic market and licensed about seven companies, popularly referred to as off-takers’ club, to supply the domestic market.

The intervention of NLNG has since helped to stabilise both the supply and price of cooking gas in Nigeria.



– This Day

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