Nigeria: PPMC ineffectiveness triggers LPG price hike

*LPG vessels.

*LPG vessels.

Kunle Kalejaye

03 June 2016, Sweetcrude, Lagos —Marine Transport Department, MTD a unit under Pipelines and Products Marketing Company, PPMC ineffectiveness in handling batting ‎of Liquefied Petroleum Gas, LPG vessels in Lagos is said to have triggered price instability of the product.

MTD responsibility is to schedule vessels ‎to bath at various terminals in Lagos in order to offload their content.

The various terminals that receive LPG according to the Federal Government scheme include NIPCO, PPMC (which supplies to other terminals), and Navgas‎.

Executive Secretary of Nigeria Association of Liquefied Petroleum Gas Marketers, NALPGAM, Mr. Bassey Essien alleged that MTD under PPMC has deliberately connived with a private company (ALGASCO) that owns a jetty (Navgas jetty) to divert LPG vessels, thereby creating monopoly and price instability of the product.

‎Speaking with newsmen in Lagos, NALPGAM ES‎ alleged that the deliberate diversion of LPG vessels by PPMC to Navgas jetty has made the price of the product increased from N2.4 million per 20 metric tonnes of truck to N3.5 million for the same quantity in less than one week.

He explained that the price instability has also affected the price of 12.5 kg cylinder of LPG which has increased from N2, 500 to as high as N3, 500 to N4, 000.

Essien noted that government efforts to supply major terminals with LPG product in Lagos are currently been eroded by PPMC conspiracy.

“Major terminals are been starved of the product‎ but if products are made available to all the terminals, the issue of price instability will not exist.

“Now that only one terminal receives the product, they will be the one that will determine the market price. When they see that other terminals have the product, they will quickly crash the price and make it difficult for others to sell and make a profit.

“So this is not an issue of the price increase, it is an issue of price instability ‎because if it is a price increase, we should know why it is going up and if is coming down, we should know why it is coming down.

“Sometime last year the same thing happened and it was selling for N4.7 million and when they (ALGASCO) perceived that other terminals were selling, they quickly crash the price to N2.9 million,” Essien said

He stressed that PPMC should create a schedule that will allow LPG vessels from bonny to bath twice in a month noting that the inability of vessels to the berth ‎is creating a supply gap.

Essien maintained that besides the profit making, an aspect of the business being affected, the end users of the product and Nigeria will also be affected.

“When end users can no longer afford LPG, they will be forced to go back to dirty fuel like kerosene, charcoal, and firewood which is hazardous to their health,” he said.

When Sweetcrude contacted Navgas on the telephone, the Managing Director Mr. Ian Brown said his company does not own ALGASCO.

He explained that Navgas is a different company with its own shareholders separate from ALGASCO. But he admitted that there is a business relationship between the two companies stating that ALGASCO makes use of Navgas terminal.

“Navgas is a terminal and we don’t trade gas into the market. Navgas does not own ALGASCO they are a separate company with different shareholders but there is the business relationship between us,” Mr. Brown said on the phone.

Stating the reason why Navgas terminal receives LPG product while other terminals don’t, Mr. Brown said it is easy for vessels to bath at the company’s terminal.

Commenting on the price instability of the product, Mr. Brown said the LPG market is deregulated noting that market forces determine the price.

Mr. Brown also hinted that Navgas has received imported LPG products from ALGASCO to meet the increasing demand of the product noting that Nigeria Liquefied Natural Gas, NLNG has not increased it supply to the domestic market.

Meanwhile President of Nigeria Liquefied Petroleum Gas Association, NLPGA‎, Mr. Dayo Adeshina informed Sweetcrude Reports that Navgas owns ALGASCO noting that the current supply gap is caused by jetty constrained.

He explained that there are two jetties for LPG vessels in Lagos but one of the jetties which belong to Navgas is hitch free from delay.

NLPGA President added that ‎PPMC jetty which is under the control of Major Marketers Association of Nigeria, MOMAN has made it difficult for LPG vessels to berth as priority is given to Premium Motor Spirit, PMS vessels.

He said that it is PPMC duties to direct LPG vessels to their terminal because of the through-put agreement they have with other off-takers connected to their terminal.

Mr. Adeshina admitted that current supply gap which has made Navgas the sole receiver of LPG vessels will lead to increase the price of the product.

Attempt to reach PPMC to comment on the allegations proves abortive after calls to Mr. Aremu and Adegebro, (staff of the company‎) decline to comment the issue.

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