Economy

Cooking Gas marketers lament NLNG supply chain

Cooking gas: Association decries hike in price, urges members to take liability insurance
Written by Maritime First

…Plead: Supply gas to coastal terminals outside Lagos***

Cooking gas marketers on Sunday appealed to the Nigerian Liquefied Natural Gas (NLNG) to ensure supply of gas to other coastal terminals outside Lagos, stressing that there was already unimaginable pressure on terminals in the Southwest, as a result of the current supply chain lapses.

The marketers indicated this in Lagos, highlighting that the appeal became necessary following the indiscriminate hike in the price of Liquefied Petroleum Gas (LPG) commonly referred to as cooking gas across the country.

The Nigerian Association of Liquefied Petroleum Gas Marketers (NALPGAM) had on Nov. 7 raised alarm over indiscriminate hike in the price of gas in the last two weeks.

Its Executive Secretary, Mr Bassey Essien, said that the price of a 20 tonnes of LPG which sold between N3.15 and N3.5 million suddenly moved to N 4.2 million.

However, Mr Azubuike Offor, the Managing Director, Chizufek Nigeria Ltd., said there was need for NLNG to increase the frequency with which its vessels deliver LPG from Bonny to the terminals, urging the NLNG management to deploy vessels of smaller capacities to access the coastal terminals, if product availability must be achieved.

He stated that NLNG could also help by increasing the supply to the Nigerian market and making sure that there was no gap in its supply, stressing that one of the major implications on the ongoing hike in cooking gas is that it makes rubbish of all the efforts by the government in deepening the use of gas in the country.

Offor said that was because a lot of people would not be able to buy the product because of the high cost.

He noted that the government removed Value Added Tax (VAT) to help reduce the price of gas.

“The current hike has reflected negatively on the price as 12.5kg now sell between N4,000 and N4,500 in Abuja and will probably get to N5,000 by Monday morning.

“This recent hike will have a huge adverse effect on the economy as a lot of gas plants that do not have enough capital to trade with will be forced to close shop.

“A lot of employees will be downsized leading to unemployment.

“I believe that the lasting solution to this problem is for NLNG to increase its domestic supply to the country since what we are told is that this hike is a result of the law of supply and demand,’’ he said.

According to him, government can also help by updating the facilities in the ports for easier discharge of LPG at the ports.

“The ports in the Eastern zones should be brought to par because it does not make sense that the vessel will load in Bonny, bring it to Lagos and trucks will come to Lagos and take the product back to the East,’’ Offor said.

Mr Chinonso Okenwa, the Managing Director, Nokson Gases Company Ltd., said that the only lasting solution to the incessant increases was a streamlined industry.

Okenwa said this would create a level-playing field where NLNG and other domestic sources would be able to deliver enough gas to all the terminals at a fair price and a steady schedule.

He noted that the law of demand and supply would bring down the prices, saying that NLNG should be applauded for the role they had played in growing the industry.

According to him, when former President Olusegun Obasanjo mandated the LPG exporter to dedicate a specific volume for the domestic market, only NLNG provided a route to market.

He noted that Chevron and Mobil should be compelled to also set aside an appreciable volume from Escravos and other channels.

“A domestic price that covers the cost of production and profit for the producers should be fixed by the producers and gas should stop being priced on an international pricing benchmark for a product produced and consumed locally.

Also read:  Cooking gas marketers raise alarm over 75% price hike

“Prices should not rise for us because it is winter abroad and demand abroad rises and more volume of LPG needs to be allocated to the local market.

“NLNG should work out modalities for supplying the depots (Warri, Oghara, Port Harcourt and Calabar) outside Lagos with product.

“This can be done even if it requires a mother vessel that loads at bonny and a smaller daughter vessel that loads from it and drops at the smaller depots outside Lagos due to their draft issues that prevent bigger vessels from coming there,’’ Okenwa said.

The marketer said that the hike of cooking gas would negatively affect poor Nigerians who had switched to the option due to the high cost of Kerosene.

He said that an increase in gas prices would impoverish the masses and cause them to switch to firewood and charcoal which had attendant effects against their health and the environment.

Okenwa said: “Its effects on the local market can be up to N5,000 or N6,000 per 12.5kg as against the previous price of N3,000 to N3,500 per 12.5 kg cylinder of gas.

“The implication of the hike on the economy will be a reduction in the purchasing power of the masses, increased health care costs from the adverse health effects of using dirty fuels.

“There may also be job losses in gas plants who suffer reduced patronage and an unpredictable market place, capital flight due to importation of gas, among others.’’

However, one of the terminal operators who preferred not to be mentioned, insisted that the major reason for the price hike was the VAT introduced by Federal Government on imported gas.

The source said that inability of NLNG to meet up marketers’ demand, made some terminal operators sought importation from outside the country.

The operator also said that diversion of gas supply to the new terminal in Port Harcourt also contributed to the ongoing hike in the country.

The terminal source said that in ensuring adequate supply across the country by NLNG, they delivered to Port Harcourt twice without supply to Western region, which created gap.

The source also said that currently LPG was scarce, saying that there was no LPG in the terminal to supply marketers.

The source was optimistic that the scarcity would soon be abated as an NLNG vessel is expected to deliver gas to Lagos.

 

 

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