Nigeria: How Sharp Practices, Port Delays Worsen Cooking Gas Crisis

28 September 2021

Peter Uzoho

Fresh facts have emerged on how some storage facilities' owners among the petroleum marketing companies and the Nigerian Ports Authority (NPA) are contributing to the ongoing scarcity and attendant hike in price of Liquefied Petroleum Gas (LPG) commonly known as cooking gas.

THISDAY reliably gathered that some of the oil marketing companies affiliated to the Major Oil Marketers Association of Nigeria (MOMAN) have formed a cartel where they now engage in acts that are distorting the LPG market.

For the past one year, the price of LPG has been on the rise, with current refilling price rising by more than 100 per cent, largely because of the scarcity of the product, occasioned by unavailability of foreign exchange for importation, naira devaluation and rising inflation.

Other factors, according to THISDAY checks include excessive arbitrary charges by government agencies, and the newly-added 7.5 per cent Valued Added Tax (VAT) to the basket of marketers' charges.

Nigeria currently consumes about 1.2mt of LPG, with Nigeria LNG currently supplying 450,000mt to the market, while marketers are left to import the remaining 750,000mt.

A 6-kilogram LPG refilling unit now costs between N3,400 and N4000, while that of 12.5kg refilling unit costs between N6,750 to N8000, depending on the part of the country the transaction is done.

However, THISDAY learnt that apart from the factors mentioned above, the scarcity and price hike have been compounded by the new cartel formed by the oil marketing companies, resulting in the inability of the "lastmile" LPG marketers to get the product from the terminal owners.

An industry source who spoke on condition of anonymity said that members of MOMAN, who are in the cartel, now reject supply from the Nigeria LNG Limited, using insufficient storage capacity as their excuse.

He said those in the group prefer white petroleum products like kerosene, diesel and petrol to LPG, adding that when they manage to receive supply from the NLNG, they sell to customers at the same price they sell imported products.

Effort by THISDAY to get the response of MOMAN proved abortive, as its Executive Secretary, Mr. Clement Isong, did not take his phone calls or reply text message sent to him.

However, Assistant General Manager, Corporate and Strategic Communications, NPA, Mr. Ibrahim Nasiru, debunked the claim on the delay of NLNG'S LPG vessel at the Apapa Port, which the company had said, partly contributes to why the Nigerian market was not able to take all of the 450,000mt.

He said: "Whoever that is telling you that NPA is the cause of any delays on LPG vessels berthing is economical with the truth. We have one of the fastest turnaround time.

"The dwell time of vessels is less than a day if not hours. Also, all these LPG vessels don't compete with any other vessel to berth. The LPG vessels have their own specialized jetties to berth.

"If NLNG is saying that NPA delays their LPG vessel, can they give you the details of the vessel? If they give us the details of the vessel, we will tell them the shipping position, when the vessel was declared at the berthing meeting?

"When did they arrive Nigerian territorial waters? When did they commence and complete documentation with all accredited government agencies? When did they pay? So, all these processes have to be done? Maybe they had issues along the line and the vessel did not berth for it to even discharge."

The Marketing Manager, NLNG, Mr. Austin Ogbogbo, told journalists recently, that because of certain logistics, only about 375,000mt of the company's dedicated 450,000mt LPG supply was being taken by the domestic market.

The factors, according to him, had to do with delay of the company's LPG vessel at the Apapa port, preference of white products for LPG by the terminal owners, and insufficient coastal storage facilities.

He said if those logistical challenges were solved, the company would supply 100 per cent of its LPG production to the domestic market.

"We could go up go 100 per cent if the coastal storage is available. Sometimes, you want to supply, LPG takes the backstage. They prefer white products in the coastal storage, or if it's not white products, your vessel might be there for days, accumulating demurrage.

"Immediately that is cleared and we are sure we can come in and supply, we will push that in, and hopefully, we would ramp up to the 100 per cent," Ogbogbo said.

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