Despite The Federal Government’s N250 Billion Intervention Fund, Production Falls Further Amid Rising Gas Prices

If there is a market trend that has in the past few months become worrisome to not a few households, it is unarguably the rising price of cooking gas which rose at the rate of 9.6% to N5000 penultimate week....CONTINUE READING

As gathered, the price of Liquefied Petroleum Gas (LPG), otherwise known as cooking gas, rose by 9.6 percent month-on-month to N5,000.00 (5kg) in November 2023 from N4,562.51 recorded in October.

It was equally gathered that the current price was not fixed as some other gas stations still sell at N6, 000 for a 5kg Cylinder in Lagos state.

However, on nationwide basis, the report, from the National Bureau of Statistics, NBS, Liquefied Petroleum Gas (Cooking Gas) Price Watch for October 2023, showed that the average retail price for refilling a 5kg Cylinder of cooking gas increased by 9.91 percent on a year-on-year, YoY, basis to N4,549.14 recorded in the corresponding period of 2022.

In the NBS report, Kano State recorded the highest average retail price for refilling a 5kg Cylinder of cooking gas with N5, 181.43, followed by Adamawa State with N5, 142.86 and Ogun State with N5, 093.75

Meanwhile, the lowest average retail price was recorded in Ebonyi State with N3, 971.43, followed by Osun and Edo States with N4, 000.00 and N4, 025.00 respectively.

In addition, analysis by zone showed that the North-West recorded the highest average retail price for refilling a 5kg Cylinder of Liquefied Petroleum Gas (Cooking Gas) with N4,738.20, followed by the North-Central with N4,662.62, while the South-East recorded the lowest with N4,088.65.

Also, the average retail price for refilling a 12.5kg Cylinder of Liquefied Petroleum Gas (Cooking Gas) increased by 9.05 percent on a month-on-month basis from N10, 545.87 recorded in October 2023 to N11, 500 in November 2023.The rising price of crude oil and its derivatives at the world market has been said be responsible for the current rise in Liquefied Petroleum Gas, LPG, also known as cooking gas.

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Against the foregoing backdrop, it is expedient to recall that the issue of escalated price of cooking has been a nagging issue that has been upsetting consumers of cooking gas, and the issue keeps getting worse by each passing day across markets.

At this juncture, it will be recalled that the Group Chief Executive Officer of the Nigerian National Petroleum Company Limited (NNPCL), Mr. Mele Kyari, threw insight into the cause of the retrogressive market trend in 2021 when he assured Nigerians that the organisation was working round the clock to boost the supply of LPG to ensure a crash of the price.

He made the disclosure known during the inauguration of Emadeb Energy Services Limited’s 120MT LPG Storage and Bottling Plant in Abuja in 2021.

According to him, “Two things are at play; one is the supply and the other is the international price of gas. It (price) moves with the price of every other petroleum product including crude oil and its derivatives. So it is a reflection of what is happening in the international market.

“What we are doing is to increase supply. Once supply is increased the prices will come down.

“The newly-inaugurated LPG plant was going to reduce the cost of energy for Nigerians for the fact that LPG is cheaper than any other product you can think of, especially as cooking fuel.”

He commended Emadeb Energy Services Limited for building the LPG plant in Abuja, explaining that the project aligned with one of the steps the Federal Government had taken to provide gas for its citizenry.

Kyari stated that: “We are aware that a lot of institutions and companies are doing this across the country. We are selecting this in line with Mr. President’s objectives to make this the decade of gas.

“One of the many ways investors could key into the decade of gas initiative was to have facilities like this for auto-gas conversion, and also to ensure that LPG is easily accessible to people.

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“The global energy transition had made the investment climate very ripe for gas even as he assured those investing in LPG project that the NNPC would guarantee supply of gas to their facilities.

“We know that the investment climate is very ripe for auto-gas and auto fuel, especially in terms of LPG as a transition fuel globally. So, we know that this is a big market for Nigerian companies and this is one of the great companies that we have around.

“As NNPC, we will come in and we will guarantee supply. That is very important for us as a business. As you are aware, we are NNPC Limited in Nigeria and we also have to make money for Nigeria. We will be there in the upstream to provide the gas.”

In a similar vein, despite fifteen enterprises receiving a N250 billion intervention money, the production of natural gas decreased in the previous year. The Energy Institute and KPMG together released an industry analysis stating that between 2021 and 2022, Nigeria’s natural gas output fell by 4 billion cubic feet meters.

Gas output in the nation, which was estimated to be 39 billion cubic feet meters in 2012, increased steadily and reached 49 billion cubic feet meters in 2020 before abruptly plunging to 45 billion cubic meters in 2021 and finally 40 billion cubic meters last year.

According to the report, “The development happened despite an N250bn intervention fund by FG through the Central Bank of Nigeria (CBN), out of which N130bn was doled out to 15 companies for the construction of Compressed Natural Gas conversion centres.

“The NGEP was introduced by the Federal Government to make the CNG the fuel of choice for transportation and the Liquefied Petroleum Gas, the fuel of choice for domestic cooking, captive power and small industrial complexes.”

After the flag off of NGEP, the CBN also introduced the N250bn intervention facility to help stimulate investment in the gas value chain as part of its efforts at stimulating finance to critical sectors of the economy.

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The fifteen companies- Dangote Oil Refinery, Nipco Gas Ltd, Nipco Plc, Hyde Energy Ltd, Lee Engineering and Construction Company, Pinnacle Oil and Gas FZE, Transit Gas Ltd, Almalgamated Oil Company Nig Ltd, First Modular Gas Systems Ltd, NOVAGAS Ltd, Greenville Liquefied Natural Gas Company, AP LPG Limited, and MOB Integrated Services Limited, Delta State Government, and Gas Nexus Ltd that received a combined N130bn, would on Thursday face the Senate Committee on gas chaired by Jarigbe Agom Jarigbe.

Against the foregoing backdrop, it can be understood that the rising price of cooking gas is rising, and it is partly due to the scarcity of the product, which is linked to supply disruptions.

However, in the bid to probe into why the price of cooking is unprecedentedly rising, and why there was obvious shortfall in production, the Senate Committee on Gas early last month, November, summoned the Managing Director of Nigerian Gas Marketing Company Ltd, Justin Ezeala, requesting the details of Gas sales, purchase agreements with Gas Companies and non-compliance with due process in the Auto CNG Project with NIPCO Gas.

The Senator Jarigbe Jarigbe-led panel issued the summon after a closed-door meeting of members of his Committee, expressed the Committee’s displeasure over the decision of the Group Chief Executive Officer of Nigerian National Petroleum Company Ltd (NNPCL), Mele Kyari, to allegedly prevent National Assembly Committees from overnighting subsidiaries of NNPCL in flagrant disregard for provisions of the Petroleum Industry Act (PIA).

The Committee also demanded Financials on the Auto CNG Project with NiPCO, where NGML has approved an Investment of N30 billion.

The committee also resolved, among other things to use relevant provisions of the constitution to compel the appearance of the Managing Director of Nigerian Gas Marketing Company Ltd, if he decides once again to ignore the committee’s summons.

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