Despite Nigeria’s over 192 trillion cubic feet (tcf) in gas reserves, the inability of government, stakeholders and investors in the Liquefied Petroleum Gas (LPG), popularly called cooking gas value chain to crash to price of LPG has become a source of concern to consumers.
CEOs present at the Nigerian Liquefied Petroleum Gas Association (NLPGA), at its annual CEOs’ Breakfast Meeting held in Lagos last year, had noted that though the nation’s total domestic LPG consumption had grown from just below 70,000 tonnes in 2007 to 500,000 tonnes in 2016, the improvement in the domestic consumption of LPG only translated to a per capita consumption of only less than 2.5kg.
This, they said, was low compared to the per capita consumption in selected African countries including South Africa at 7.28kg, Ghana at 9.45kg, and Morocco at 66.27kg.
But the latest intervention by the Nigerian Liquefied Natural Gas (NLNG) to address the challenges of infrastructure, especially at the jetties which are mainly multi-product jetties could be a step in the right direction.
The NLNG as part of efforts to improve the state of infrastructure at the jetties recently committed about N200 million to the rehabilitation of an LPG jetty in Apapa in a bid to address the frequent scarcity of the product which gives some middlemen the opportunity to create artificial scarcity.
Other interventions by NLNG included increase in the domestic supply of LPG to wet the country with product and the plan for a new LPG vessel. All these interventions when completed will ultimately take Nigerians away from the use of dirty fuel such as firewood, charcoal and kerosene.
The CEOs at the forum had identified some factors militating against the growth of the LPG sector to include; the massive inadequate supply of LPG equipment, high cost associated with the acquisition of cylinders and LPG stoves, insufficient number of jetties
and LPG inland storage facilities, excessive import duties and VAT on LPG equipment, and inadequate road and transport network facilities.
They also complained about the lack of access to long-term funds for LPG project in the country while blaming the banks in this regard.
However, representatives of some of the banks at the meeting enlightened the LPG operators on what they needed to do to attract funding from the banks.
The stakeholders at the meeting expressed confidence that the Plan by the Federal Government to grow the domestic LPG market through its national LPG policy would afford investors and operators to tap into the over $10 billion investment opportunities yet to be unlocked in the sector.
They noted that, the LPG policy would spur a revolution and urged the government to ensure that the policy is fully implemented to the benefit of all and sundry in the country.
NLNG recently committed to increase domestic LPG supply from 250,000 metric tonnes to 350,000 metric tonnes on a yearly basis.
NLNG Manager in charge of Sales Administration, Mr. Ahmed Joda said this during a presentation titled “Unlocking Domestic LPG Investment Opportunities” at the NLPGA Conference which held at Federal Palace Hotel in Lagos.
Joda stated further that “NLNG also advocates and encourages infrastructure development to ensure de-bottle-necking of existing receiving & storage facilities and expansion of the facilities with the construction of new ones.”
According to him, Domestic LPG (DLPG) consumption is expected to grow to 1.7 million tonnes per annum by 2020 if extensive intervention strategies are adopted.
He stated that while NLNG is focusing on optimising coastal delivery to Apapa –revamp NPMC jetties, optimising shipping operations to reduce product shipping costs, and encouraging storage capacity development; there is a need for continuous engagement of direct stakeholders (Off-takers) on safety and active participation in an industry-wide LPG conversion scheme.
‘‘Currently, Lagos is the primary LPG distribution point in the country. The challenge is that the Lagos port is highly congested and unable to effectively serve as the major distribution point for the entire country.
Opening up other distribution points in parts of the country as well as developing transportation modes to other discharge points will lead to the advancement of the DLPG market,’’ he said.
23,000 cubic metres vessel arrives 2020
And to further drive down the cost of LPG, the NLNG says it is planning to reinforce the domestic cooking gas market with a new LPG vessel which will boost volume and availability, as well as consolidate the company’s contributions to deepen the industry and increase consumption of the clean gas.
The new LPG vessel will be built by E.A Temile and Sons Company Limited, a wholly Nigerian company, under a contract with Hyundai Mipo Dockyard, South Korea and chartered to NLNG.
At a contract signing ceremony between E.A Temile and Sons Limited and Hyundai Mipo Dockyard in London two weeks ago, the Managing Director and Chief Executive Officer of NLNG, Tony Attah, remarked that the signing ceremony was ground-breaking for NLNG because it supports the company’s aspiration, firstly, to further help develop the DLPG market and to promote the growth of indigenous companies and Nigeria’s economy.
“NLNG remains the single largest supplier of Liquefied Petroleum Gas (LPG) (over 50 percent) in Nigeria and looks to enable its expansion in future. We produce the LPG in our Plant in Bonny, Rivers State, Nigeria, and transport it by sea to Lagos from where it is distributed to every part of the country. This assures the product availability, accessibility, and affordability which is central to us as a company. NLNG’s domestic LPG intervention scheme aligns with its business focus of bringing energy to the world and helping to build a better Nigeria.