Adeshina: NLNG Should Supply LPG Cargo Weekly to Crash Prices

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The President of Nigerian Liquefied Petroleum Gas Association, Mr. Dayo Adeshina spoke to Ejiofor Alike on the challenges hampering LPG usage in the country and suggested what could be done to improve the situation. Excerpts:

Why has the price of LPG not crashed to a level that will reflect Nigeria’s position as a producer of LPG?
You can’t say that it has not crashed. At least, if you compare what you had earlier on to what we have now, you will know that there is a change. But I understand fully what you are saying. We need to understand that unless we take care of all the infrastructural challenges that we have, we are not going to have the desired results that you want. As a chain, every aspect of the chain must work. If one aspect of that chain breaks, then it is going to affect everything down the line.

What are those infrastructural challenges?
The infrastructure challenge I am talking about is in the area of discharge of LPG. When NLNG designed this programme, it was designed in such a way that there would be one discharge in a week. Now, at best in the past, we had one discharge in a month. It was only recently that they were able to do two discharges in a month but we need to go back to one discharge in a week or even two discharges in a week, if it is possible. That is when we can achieve that price reduction that we are looking at because with that, there more players will come into the business; more coastal terminals will be required. As you know, Port Harcourt terminal is about to come on stream. There is also one in Calabar. These are about 6,000 metric tonnes. That will free up a lot of pressure in the industry. Now, within the existing structure that we have, NAVGAS is going to build another 4,000 tonnes; NIPCO is building another 5,000 tonnes, bringing the additional capacity to about 10,000 metric tonnes. Another jetty is also being certified, apart from the NOJ and BOP.

That will come on stream between September and October. Out of that, there is another jetty – PWA that is being certified. So, efforts are being made that will impact positively on pricing. Another thing you have to remember is that, yes, gas is produced in Nigeria and we have foreign pricing. But before when the price rose from less than N3 million to over N5 million, foreign exchange is a major problem. Some of the charges by the Nigerian Port Authority (NPA) and others are in dollars and those things have negative impact on pricing. But thankfully, now that the federal government is actually on board and directly trying to do something, there has to be a holistic approach now to look at where all the challenges are within the sector and once all those things are taken care of, we are going to see a keen competition and price will come down.

What specific steps or efforts did you make to tackle some of the challenges you met on ground?

First of all, the market was very fragmented. Yes, we had an association but we were not getting the right responses from the government. I guess we were shooting in one direction; we concentrated on the Ministry of Petroleum Resources because rightfully so, the ministry of petroleum is in charge of gas in the country. Now, if you keep doing the same thing all the time, you keep getting the same results all the time. But if you do it differently, you get different results, which is exactly what happened. In November 2014, I went to see a friend in Abuja.

The federal government had just changed ministers and some were going to be appointed. When I got to his office, I noticed that there were security vehicles, pilot cars and heavy presence of operatives of DSS. I knew that my friend was active politically and was also a potential minister. I use to go to his office regularly whenever I am in Abuja. In fact, he is one of our council members in Abuja. But as I walked into his office on that particular day, I was stopped by DSS operatives, who informed me that the receptionist told them that I should be allowed into the office. So, when I got to his office, I saw a gentleman, who was sitting down. I greeted the gentleman and turned to my friend and asked him who was after him that he could bring that large number of security operatives just because of his ministerial ambition.

I asked him if that was how he would deploy security around himself when he got a ministerial position and prevent his friends from coming around him. I told the gentleman sitting in his office that the man had been my friend for several years but political ambition was turning him into something else and he was putting security operatives around himself. I told both of them that if I met such security men next time and they disturbed me, I would break somebody’s head. My friend laughed and asked me to meet the Minister of Planning, Alhaji Suleiman (Prof. Abubakar Olanrewaju Suleiman), referring to the gentleman sitting in his office. So, at that meeting, I explained to the minister our challenges and he assured me that there was no reason why the government should not listen to us. I knew that that government would listen to us. So, we later went to him and presented our challenges and that was how the past administration formulated the LPG policy.

For over one year, we were meeting constantly with all the relevant stakeholders – Ministry of Finance; Budget and Planning; Women’s Affairs; Customs; Fire Service; Health and Petroleum Resources. We were meeting monthly to fashion out LPG policy. The whole idea was to take that document to the National Economic Council and the Federal Executive Council. Of course, the former administration left and this present one came. We have presented to this present administration and thankfully, in the new National Policy, the whole section of LPG was taken from that policy document we prepared under the past administration. For me, I am the most fulfilled human being right now because I have achieved what I needed to achieve for this industry. This industry needed to have a direction; this industry needed to be run in a proper manner.

Investors needed to have a clear idea that they have government’s support that this is not a market where anything goes. So, for me, we have focus – this was what we wanted and we now have it. It is now up to us to take advantage of what we have to make investments because we now have a proper structure that is streamlined. We still have one hurdle to go – we still need to make sure that the entire country understands the importance of LPG. In Ghana, all the cars run on LPG. We are still chasing petrol around the whole place here. We are importing the petrol, while we have the LPG here. Why can’t we take advantage of the LPG that we have and reduce the amount of consumption of petrol and stimulate the LPG industry.

In Indonesia, six million homes were converted within three years. They gave out cylinders free. With that, they saved $7 billion because before that, they were spending $9 billion on kerosene subsidy. We have spent $5 billion on subsidy. Thankfully, we have stopped subsidy on kerosene. But we need to take a step further to make sure that people get value for their money; to make sure that they live a cleaner and healthier lives; and to reduce the number of people that go to hospital for respiratory diseases because 70 per cent of the smoke from kerosene and firewood is in the lungs.

In a small sector such as the LPG sector, the umbrella union seems to be working at cross purposes with the LPG marketers, and this misunderstanding became more pronounced during your tenure. What is your reaction to this?

Well, you know that I said something earlier on that if you do the same thing the same way all the time, you will end up getting the same results. When you want to do things differently, you will get different results. Part of my grievances with the regulatory agencies stemmed from the issues that happened with the marketers. If I headed the marketers, I will bury my head in shame because you have to lead by example. That is why even when the Nnewi gas explosion occured, I told DPR when we had a meeting with the DPR director and his people, that even if it is my own members that don’t comply with all the safety principles, they should shut them down. If it is my company; if it is my deputy’s company or anybody in the exco, the company should be shut down. It is very important because you can’t replace life. How many people died in Nnewi? How many people were compensated? Who is in jail today? So, we will have friction because my own style is different.

I don’t care about who is involved. Just do the proper thing. You asked me what my challenges were. My focus was that in any association, people will join the association as a pressure group with a focus to do certain things and the more you can allow them achieve those things, the more the people will come. Having seen that a lot of the equipment in many of these filling plants was old equipment, we went to meet the Bank of Industry (BoI) to collaborate with them.

Having seen the explosions we had in filling plants, a lot of them don’t have insurance – two insurance companies gave us discount on premiums. We have an HMO and they (marketers) are collecting money in the terminals, and yet the drivers don’t have medical insurance; the families of drivers can’t access medical insurance. This is what I made sure that NLPGA enjoyed the benefits. I am not big on egos; I don’t care if you call me president or you don’t call me. I will still do my job if you don’t call me. Mine was to focus on the job at hand and what we needed to have done.

If not, I wouldn’t be in Abuja 33 times in one year at my own expense because the association does not pay us. The only person that is paid is the Executive Secretary. The association does not pay any other person. But they (marketers) collect money from the terminals. What do their members have to show for this? Any of their members could have accessed BoI funding through us because they were the ones we were fighting for. If you walk into filling plants, there are no safety measures.

People walk around without safety measures. We also want a situation where people can have confidence in the market. But as long as this scenario that I described to you is still going on, it means that you have failed. So, for me, the smokescreen was the way I was elected – that is their leadership grouse – that we changed the constitution. Yes, we changed the constitution but we sent out notices. It wasn’t a one-man army and I have never run a one-man army.

Even in my Exco, everybody makes contribution and we take a joint decision. I have never gone to a meeting and tell them that we must do this or that; even in the council. We have had situations where council overruled us as Exco. One thing is to convince people. We are intellectuals; we are not illiterates where somebody will come and say that this is what must be done. No! You have to explain to us why yours is the best so that we debate it. More importantly, only one person opposed that constitutional change at that election. So, where does one person change the decision of an industry? As far as I am concerned, it was somebody’s ego trip, trying to disrupt the industry. But they failed woefully because today, the policy has been passed. If they are not careful, they will be left behind.