Nigeria: Cooking Gas - Govt Should Tackle Foreign Exchange, High Prices, Instability - Stakeholders

29 November 2021

Experts, investors and others have urged the Federal Government to end the prolonged era of foreign exchange, high prices and instability in Nigeria's Liquefied Petroleum Gas, LPG sector.

The President, Nigeria LPG Association, Mr. Nuhu Yakubu, said the association had been engaging with relevant agencies, with a view to addressing the issues.

Speaking at the just-concluded 11th International Conference and Exhibition in Lagos, he said: "As an association, we are currently engaging with respective government agencies in addressing issues around LPG supply, particularly access to foreign exchange, value-added tax, levies, etc. We believe our efforts will yield positive results in good time.

"Also, it is not far-fetched to state, therefore, that sustaining the growing adoption of LPG through sector-friendly policies and programmes will advertently support economic growth that will yield jobs and wealth creation. It is our collective responsibility to make this happen and an event such as this is one aimed at setting the pace.

"In line with the 7th Sustainable Development Goals, SDGs, deepening education on the role of diverse applicable uses of LPG is critical as the world aims to provide cleaner, reliable, sustainable and affordable energy sources for everyone by 2030.

"Worthy of mention is the declaration of the Decade of Gas, by the Minister of State for Petroleum Resources, Chief Timipre Sylva with the support of the President and Commander in Chief, Retired Gen. Muhammadu Buhari, GCON, who ably doubles as Honorable Minister of Petroleum Resources.

"The LPG sector is projected as an industry with this executive posturing to galvanize the entire LPG value chain to drive an upsurge adoption of LPG in spurring growth and improving the wellbeing of households across Nigeria."

Also, in the communiqué obtained by Vanguard at the end of the event, the experts noted that the nation had very huge gas reserves of over 200 trillion standard cubic feet, but noted that the current business environment had not been friendly.

Specifically, the communique stated: "That the Petroleum Industry Act, PIA, should be implemented in a manner that will encourage massive domestic and foreign investments, required to stimulate sustainable growth while creating many multiplier effects, including jobs for Nigerians.

"That such new investments are required to reduce Nigeria's current dependence on imported LPG as well as meet rising future demand based on increased population. That the government should be consistent in the conceptualization and implementation of policies needed to ensure stability in the LPG sector.

"That relevant stakeholders need to be involved and carried along in the process of taking new decisions to ensure successful implementation. That the imposition of the Value Added Tax, VAT, has negatively affected the sector in many unintended ways and should be eliminated.

"That the high prices of LPG have shifted the demand to firewood and charcoal, thus fuelling desertification and erosion with a very negative impact on the environment. That a package of new incentives should be introduced to stimulate investment, processing and utilization of LPG in Nigeria in line with the nation's Decade of Gas agenda.

"That the LPG sector gasps for massive infrastructural development to stimulate and sustain expansion in the coming years. That the government and its agencies should intentionally eliminate all hindrances, especially lack foreign exchange, currently staring the sector in the face."

However, the Federal Government, yesterday, moved to check the rising price of cooking gas by setting up a new Domestic Base Price for gas as the, "Export Parity Price at the delivery point where there is a dominant supply of gas in Nigeria."

The Chief Executive Officer of the Nigerian Midstream and Downstream Petroleum Regulatory Authority, NMDPRA, Engr Farouk Ahmed, in a statement in Abuja, set out a new Domestic Base Price, DBP, framework and applicable gas wholesale price for the strategic domestic sector.

Engr. Ahmed explained that the applicable Wholesale Gas Price for the power sector shall be the established Domestic Gas Price.

According to him, the DBP will be determined annually based on the criteria set in the Third Schedule of the Petroleum Industry Act, which are a reference DBP to prices of gas in countries with significant reserves and production of natural gas, ensuring that Base Price considers the lowest cost of gas supply based on a Three-tier Cost of Supply Framework and DBP is related market-prices tied to International Benchmarks (for strategic investors)

The Authority explained that, "Export Parity Price in this context is defined as a market-driven pricing framework, responsive to fiscal changes and weighed to ensure pricing flexibility while moderating swings to protect fragile domestic industries".

Investigation by Vanguard, weekend showed that the price of the product has continues to hover at N8,500 per 12.5 kg as consumers take to increased firewood consumption in different parts of the nation.

Vanguard News Nigeria

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