Abuja — The Petroleum Products Pricing Regulatory Agency (PPPRA), Tuesday, attributed the high price of Liquefied Petroleum Gas, LPG, also known as cooking gas, in the market currently to disruption in the supply of the commodity, caused by incessant pirates’ attack on LPG vessels and delays in the movement of LPG vessels.
Speaking in Abuja, at an interactive retreat on understanding the dynamics of downstream sector of the petroleum industry, General Manager, Gas and Renewable, Mr. Olasupo Agbaje, disclosed that the LPG market is very sensitive and reacts sharply to any disruption in supply, hence the current high price.
He added that the removal of Value Added Tax, VAT, had initially brought down the price of LPG, before the recent spike in the price.
Agbaje said, “The removal of VAT on locally-produced LPG had an immediate impact on the price of the commodity in the market. There are many factors that account for pricing. When VAT was removed, within one month, we had about 20 per cent drop in the price of LPG.
“If you now check, we had some other incidents. There were pirates’ attacks on some LPG vessels. There are combinations of factors. It is a deregulated market; so nobody is tying down any price. You find that it had an immediate impact and then other factors now came in which affected the price and it now went up again.
“The LPG market is very sensitive. Once there is any disruption in vessel movement, or it is stuck in Lagos, you find that people immediately look and take position and them begin to adjust their prices. We have had a series of pirates’ attacks on LPG vessels. It is an issue that needs to be addressed.”
Agbaje explained that the PPPRA had a strong partnership with the Nigerian Maritime Administration and Safety Agency, NIMASA, noting, however, that the agencies would continue to work towards addressing the challenges on the waterways, especially as it affects petroleum products supply.
He said, “We have a strong relationship with NIMASA, but piracy goes beyond relationship; it is a criminal thing. You have them operating on their own will. Once there is any disruption, NIMASA would do what it had to do.
“We will continue to collaborate with NIMASA, but this at times has such impacts on the market that is beyond their control. But we would continue to do our best to ensure that we minimize some of these disruptions.”
He further stated that the Federal Government was working on a cylinder injection programme, and was in consultation with stakeholders on the strategy and modality for the programme.