Infrastructure, taxes, part of reasons for cooking gas price hike in Nigeria’s -Marketer
The meteoric rise in the cost of Liquefied Petroleum Gas LPG popularly known as cooking gas over the past months is generating lots of reactions from Nigerians . Since the past decade , the product have been sold at costs excluding VAT but with the recently introduced taxes , charges , inability to source locally and the aftermath of the Covid-19 crisis , prices have soared with a whopping 110% increase from what it was at the same time last year.
Global Financial Digest reports that worldwide prices of cooking gas has jumped to 100% from December 2020. This is in accordance with publications from the National Bureau Of Statistics NBS which stats puts the average refill price of a 5kg cylinder of LPG increasing between 3.52% and 8.64% monthly since August 2021.
In an interview with 774Ngr news, Engr. Peter Elofusim , the Managing Director of Elofusim Energy LTD with over thirty gas stations covering Abuja , Lagos, Anambra and Imo spoke on the reasons for soaring gas prices and how the Nigerian consumer may seek alternative and relatively cheaper alternative sources to cook if the present economic circumstances prevail.
Elofusim said the adverse weather conditions in the United States , high gas prices in Europe and surge in demand for the product in Asia are part of the reasons for the meteoric rise, since Nigeria LNG prefers to export its LPG since they get better value for it. This puts paid to an earlier report that the NLNG only serves 40% of domestic market demand while dealers get to source from other countries to meet up with demand. And the gas even sold by NLNG is dollar rates.
He pointed out that a lot of Nigerian refineries are comatose and there are not enough depot capacity in the country to hold the product.
Elaborating on infrastructure and logistics challenges, he said , “Usually, a lot of companies do turn around maintenance at this period. These essential maintenance work are creating a tight gas market in that is making the restocking of gas difficult”.
Elofusim also spoke on the newly introduced 7.5% VAT and import charges on LPG which industry experts have attributed to hike , and even predicting that a 12.5kg cylinder may go for N10,000 in the next 60days if the federal government does not address it.
“Before now, there was no charge on LPG transactions. [They] unilaterally and illegally imposed charges per KG og LPG. It has never been within their purview to regulate or tax as LPG is deregulated.
“Another problem is the throughput or holding capacity for LPG in the country. The demand for the product grew faster than we can store.”
Speaking on how patronage has been since the steady increase in prices, he said:
“Well, so far there is not much difference in the overall quantity sold per week. The only difference is that people are buying lesser quantity than they would have normally bought. That means they do more trips to buy gas per week. Mt stations sell about 250 tonnes monthly and it has not gone down. But I fear that if it continues , the consumer elasticity to take in the new price given the prevailing economic situation in the country would reach its limit and they may resort to alternatives like wood and charcoal”.
Elofusim Energy Linited also owns gasport , a platform that enables customers order cooking gas online and get it delivered in thirty minutes or less.