10 January 2017, Lagos – The practice whereby Liquefied Petroleum Gas (LPG), better known as cooking gas, is supplied to the Nigerian market at international price, has been blamed for the current escalating cost of the product at the domestic market.
The price of 20 metric tonne – one truck of LPG recently increased from around N3.5 million to above N5 million and this increased the retail price of the product as 12.5 kilogramme cylinder, which used to be sold for N2, 700 – N3,500 suddenly went up to above N4,500 in some retail outlets.
With the pricing of the product being based on the fundamentals at the international market, the marketers argue that the current high price is also fueled by the rising cost of crude oil and the high cost of forex.
“NLNG produces LPG locally but the domestic price is based on the price in the international market. That is why when there is winter in Europe and the price of gas goes up, Nigerians are also made to pay the high price even though there is no winter in Nigeria. With the current rising price of crude in the international market, the price of gas has also gone up and Nigerians are also paying the price. This is the reason why the price of LPG has gone up” said one of the marketers.
Another marketer, who also spoke off record, stated that as long as NLNG hinges the price on the international market fundamentals, the current high cost of dollars will escalate the domestic price of gas.
“The high cost of dollar and high cost of crude are responsible for the current price hike. Unless there is domestic pricing, Nigerians will continue to pay the international market price, despite the fact that it is a local product,” the marketer said.
In an interview with THISDAY at the weekend, the President of the Nigerian Association of LPG Marketers (NALPGAM), Mr. Basil Ogbuanu also corroborated these claims but pointed out that the “good news is that the product is available in the market.”
According to him, the current high cost is artificial cost imposed by importers, adding that the hike would ease a bit when NLNG brings another vessel to Lagos, which was expected at the weekend.
“The last consignment of NLNG was sold for N5.1 million per 20 metric tonnes before the stock was exhausted. But those who imported are currently selling N6 million. So, it is artificial cost, which will not last long. However, whether N5.1 million or N6 million, it is still on the high side because it was N4 million – N3.5 million before this period,” Ogbuanu said.
“Unless the pricing template of LPG is changed, Nigerians will continue to be affected by the international pricing. Initially the exchange rate for which NLNG pricing was based was N190 but today, it is over N300 and this has affected the local price of LPG. The good news is that intervention of NLNG has solved the problem of supply,” he added
He argued that the scarcity of foreign exchange should not have affected the price of cooking gas in the country because it is a local product and not imported.
- This Day