NLNG blames VAT, forex for hike in price of cooking gas
Nigerian Liquefied Natural Gas Limited (NLNG) says it is not responsible for the hike in the price of Liquefied Petroleum Gas (LPG), also known as cooking gas, in the country, as the company explained that value added tax (VAT), as well as, foreign exchange, and others were to blame.
The price of cooking gas across the country has soared in a space of two months reaching as high as N550/kg at the street retailers and N500/kg at major marketers.
Reacting to the development against the backdrop of claims that it was responsible for the hike, NLNG General Manager, External Relations and Sustainable Development, Mrs Eyono Fatayi-Williams, in a report, said the price of cooking gas is dependent on ‘several market forces.’
“It is 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. By committing 100 per cent of its Butane production, NLNG has prioritised the domestic market, thus realising its domestic supply target safely.
“NLNG’s current maximum butane production meets about 40 per cent of domestic demand. The balance is supplied by other domestic producers or via imports. Therefore, NLNG’s production alone is not sufficient.
“The vessel’s delivery to these terminals is occasionally hampered by challenges at the terminal, including storage capacity, terminal access, draft restrictions and prioritisation of other products over LPG,” Mrs Fatayi-Williams explained.
She blamed the hike of the product on VAT, foreign exchange, and others, further noting that ‘NLNG’s drive towards deepening the domestic LPG market is pivotal in line with it’s vision of helping to build a better Nigeria.
Barely a week after the National Bureau of Statistics (NBS)’s Liquefied Petroleum Gas (LPG) Price Watch Report for July 2021 showed an increase in the price of 12.5kg of the commodity by as much as 3.1 per cent in July from June, this year, the commodity may be reaching a 40 per cent mark before end of August.
It would be recalled that an NBS data reported penultimate week the price of cooking gas increased by N133 from the average price of N4, 289 it was sold for in June 2021.
According to the data, Abuja recorded the highest average price for the refilling of a 12.5kg cooking gas with N5,050, followed by Gombe at N5,000 and Kogi at N4,985, with Kaduna State registering the lowest average price of refilling of the cylinder size as it sold on at an average of N3,718.1.
This is followed by Zamfara and Oyo, which sold to end-users for N3,725.4 and N3,859 respectively.
For the 5kg cylinder, the average cost of buying cooking gas increased nationwide in the month under review from N2,068.7 to N2,141.6, indicating a 3.5 per cent increase month-on-month.
The data showed that Akwa Ibom, Benue, and Bauchi States were regions with the highest average prices of refilling 5kg cylinder of LPG as the product was sold to consumers for N2,600, N2,540, and N2,486 in those areas respectively.
Abuja saw the lowest average cost at which people refilled their 5kg cylinder for N1,806.2, while people in Lagos did theirs at the price of N1,840.8, while Ondo residents did theirs for an average cost of N1,842.9.
On a broader view, it was observed that the highest average cooking gas prices were recorded in the North Central region which has an average cost of N4775.5 while the North-West zone recorded the lowest to the sum of N4083.7.
As for the 5kg cylinder, it was most expensive in the North-East zone at N2306.7, unlike in the South West region where it was sold on average to consumers for N1882.6.
The price of LPG has maintained its upward trajectory since December last year and has left an increasing number of its consumers in the nation lamenting over the ugly situation considering the economic reality.