29 March 2016, Lagos – Marketers of cooking gas and other operators in the Liquefied Petroleum Gas (LPG) market have denounced the practice whereby certain associated costs, which they describe in the LPG sub-sector as agent fees, are paid in foreign exchange.
Some of the marketers, who spoke to THISDAY at the weekend, noted that while the purchasing price of the commodity is paid in Naira, the associated costs are paid in foreign exchange, thus contributing to higher costs in view of the current scarcity of forex.
They said the development had made it difficult for the price of LPG to crash completely in the face of the drop in crude oil prices.
According to them, the scarcity of foreign exchange has affected the price of cooking gas in the country, despite the fact that it is a local product.
“The agent fees are paid in dollars, that is, the money we pay to the Nigeria Ports Authority (NPA) and vessel operators. For instance, NAVGAS also charges in dollar but PPMC and NIPCO charge in naira,” said one of the marketers, who did not want to be quoted.
Another marketer told THISDAY that the purchasing price of 20 metric tonnes of LPG is N2 million and is paid in Naira but other associated costs are paid in dollar.
“The price of gas would have been less but for the associated costs, which are paid in dollars,” he said.
According to him, the retail price of 12.5kg, which is currently around N2,300 –N2,500 at the gas plants, would have been much less if the associated costs are paid in naira.
THISDAY gathered that before the drop in the price of crude oil, 20 metric tonnes of LPG was sold around N3.4 – N3.7 million but it came down to N1.9 million when the oil price slumped to all-time low below $30 per barrel.
However, with the oil price around $40 per barrel, 20 metric tonnes of LPG currently goes for about N2.4 million.
It was also learnt that gas plants sell 12.5kg cylinder around N2.300 – N2.500 to end users and at about N1,700 – N1,800 to wholesalers.
President of the Nigerian Association of LPG Marketers (NALPGAM), Mr. Basil Ogbuanu however told THISDAY during the weekend, that NLNG was steadily flooding the domestic market with LPG, while ALGASCO LPG Services and NIPCO were also engaged in importation.
According to him, NLNG vessel of 13,000MT capacity brings the product to Lagos every two weeks.
“NLNG is steadily supplying the market now. They bring in product every two weeks and it is no longer like before when their vessel spent up to one month in Lagos,” Ogbuanu said.
He however said despite the success recorded by NLNG, the penetration of LPG in the country was still low.
“Despite the success, penetration is still about 10 per cent. For instance, there are no gas plants in the whole of North East. Consumption has however gone up in the south east, south south and south west as a lot of people have now realized that LPG is safer, cheaper and more environmental friendly. There are over 20 gas plants in Enugu. Umuahia, which used to have one gas plant, now has many gas plants. In Lagos, Igando area is now referred to gas road because there are many gas plants there. The same thing goes with Ibadan,” he explained.
- This Day