NLNG Blames Supply Deficit for Rising Price of Cooking Gas

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•Says it can’t meet domestic demand

By Peter Uzoho

Nigeria Liquefied Natural Gas (NLNG) Limited has said its production alone cannot meet the country’s domestic demand for Liquefied Petroleum Gas (LPG) popularly known as cooking gas.

NLNG also stated that it delivered a total of 375,000 metric tonnes (MT) of LPG, comprising butane and cooking gas in 2020 out of which about 34,000MT was delivered in December 2020 alone.

The General Manager, External Relations, NLNG, Mrs. Eyono Fatai-Williams, gave the details yesterday while responding to THISDAY’s enquiry on the high cost of the commodity, which has seen a 12.5kg cylinder of gas rising to N4,500 from N3,600 within two months.

Fatai-Williams, also debunked the allegation by marketers that the company contributes to the rising price of LPG in the country, explaining that the price of the product is dependent on market factors, including the forces of demand and supply.

THISDAY had reported that excessive administrative and other sundry charges by the Department of Petroleum Resources (DPR), the Petroleum Products Pricing Regulatory Authority (PPPRA), among others, have caused an astronomical rise in the price of cooking gas.

Also, insufficient supply of LPG to local marketers by NLNG Limited, which is the major supplier of the product in-country was said to have also contributed to the scarcity of the product and the resultant increase in price lately.

But Fatai-Williams said on the side of supply, NLNG has continued to play a pivotal role in deepening the domestic LPG market in line with its commitment.

She said: “In 2020, NLNG delivered a record 375,000 metric tonnes of LPG (butane/cooking gas) to the domestic market, a significant increase in the previous record of 275,000 metric tones delivered in 2019.

“This represents over 85 per cent of NLNG’s LPG (butane/cooking gas) production for the year.

About 34,000 metric tonnes were delivered in the month of December 2020 alone.

“NLNG has further increased its annual commitment to the Nigerian domestic LPG (butane/cooking gas) market to the tune of about 100 per cent of its LPG (butane/cooking gas) production and everything is being done to realise this target, safely.”

She faulted the claim that NLNG contributes to supply shortfall and the attendant price hike.
“It is instructive to note that the current domestic demand for LPG (butane/cooking gas) is estimated at about one million metric tonnes. NLNG’s current production represents about 40 per cent of the demand.

“Therefore, NLNG’s production alone cannot meet the domestic market demand. The 60 per cent domestic cooking gas demand balance is supplied by either other domestic producers or via imports,” she stated.

According to her, consequently, the reliance on importation to cover the demand balance appears to put upward pressure on prices in the domestic market.

She, however, said the NLNG, in the meantime, is continuing its drive in the deepening of the domestic LPG market with the planned supply of propane for both domestic industrial uses and to support the recently launched autogas scheme of the federal government.

She added that the company is optimistic that the completion of the Train 7 project will provide an opportunity to further deepen the domestic LPG market.