NLNG Denies Responsibility for Rising Cooking Gas Price

Peter Uzoho

As the rise in price of Liquefied Natural Gas (LPG) commonly known as cooking gas continues to escalate and some fingers being pointed towards the Nigeria Liquefied Natural Gas (NLNG) Limited as part of the cause, the company has denied the allegation.

NLNG said it was erroneous that it contributed to the supply shortfall of cooking gas in Nigeria and consequent hike in the price of the product in Nigeria.

The continuous rise in the price of cooking gas has plunged many users of the product, particularly the low income earners and rural residents into using firewood and charcoal to cook.

THISDAY’s check revealed that currently, a 12.5 kilogram (kg) of LPG now costs between N6,000 to N7,000 to fill in some locations in the county while it now costs marketers an average of N8 million to import 20 million tons of the product into Nigeria as against between N6.8 to N7.2 million it was a few months ago.

NLNG in a statement issued yesterday and signed by its General Manager, External Relations and Sustainable Development, Mrs Eyono Fatayi-Williams, in response to a publication (not in THISDAY) said the price of LPG in the domestic market was dependent on several market factors, including the forces of demand and supply.

The company maintained that on the supply side, it plays a pivotal role in the Nigerian domestic LPG market in line with the commitment it made to help deepen the market.

It revealed that it had recently increased the volume of its annual commitment to the market from 350,000 to 450,000 metric tons, saying that was about 100 per cent of its Butane production.

According to the statement, in 2020 alone, NLNG supplied over 80 per cent of its LPG sales (Butane/cooking gas) to the Nigerian market.

“It is also erroneous, to say the least, that NLNG contributes to the supply shortfall of cooking gas in Nigeria and consequent price hike. The price of LPG in the domestic market is dependent on several market factors, including the forces of demand and supply.

“On the supply side, NLNG plays a pivotal role in the Nigerian domestic LPG market in line with the commitment it made to help deepen the market.

“Recently, the Company increased the volume of its annual commitment to the market from 350,000 to 450,000 metric tons, which is about 100 per cent of its Butane production. Butane gas is less volatile and is, therefore, suitable for cooking. In 2020 alone, NLNG supplied over 80 per cent of its LPG sales (Butane/cooking gas) to the Nigerian market,” NLNG said.

By committing 100 per cent of its Butane production, NLNG said it has prioritised the domestic market, thus realising its domestic supply target safely.

Pointing out that its current maximum Butane production meets about 40 per cent of domestic demand and that the balance was being supplied by other domestic producers or via imports, NLNG stated that its production alone was therefore not sufficient for the Nigerian market.

The company noted that in order to achieve its aspiration for the domestic supply, it has a dedicated 13,000 metric ton vessel, LPG Alfred Temile, that delivers the product to the market through Lagos and Port Harcourt terminals.

“The vessel’s delivery to these terminals are occasionally hampered by challenges at the terminal, including storage capacity, terminal access, draft restrictions and prioritisation of other products over LPG,” NLNG said.

The statement maintained that NLNG’s domestic LPG pricing was most competitive compared to all other alternatives (imported and domestic supply).

It however noted that several factors such as the newly introduced Value-Added Tax (VAT), foreign exchange and other factors impact the pricing of the product which is indexed to the international pricing model.

The statement further said it was inaccurate to state that NLNG produces 22 Million Tonnes Per Annum (MTPA) of LPG, explaining that the company was primarily an export company that produces 22 MTPA of Liquified Natural Gas (LNG) and 5 MTPA of Natural Gas Liquids (NGLs).

“NLNG’s drive towards deepening the domestic LPG market is pivotal in line with NLNG’s vision of helping to build a better Nigeria. The company is optimistic that the eventual completion of its Train 7 Project will further will provide deepening the domestic LPG market”, the company added.