By Adewale Sanyaolu
NIGERIA may be heading for its worst domestic energy crisis as efforts by the Federal Government to deepen the use of Liquefied Petroleum Gas (LPG) popularly called cooking gas, may have hit a brickwall amidst allegations of diversion of LPG vessel to a private terminal by government agencies.
Nigeria, according to statistics from the Nigeria Liquefied Petroleum Gas Association (LPGA), Nigerians currently consume 385,000 metric tonnes of LPG per annum, up from the 2013 consumption of 250,000, which is even considered too low when compared with Ghana, Senegal, Cameroun and Kenya’s utilisation.
Already, the development has left a sour taste in the mouth of consumers, who have now resorted to the use of dirty fuel energy sources, like firewood and charcoal to meet their cooking needs.
The effect of the alleged diversion is scarcity which has led to skyrocketing prices, currently hitting an all time high of N4,000 for a 12.5kg cylinder size.
But just as consumers were still grappling with the shock of soaring cooking gas prices, kerosene another critical domestic energy source suddenly dried up from the various depots across the country, leading to acute shortage of the commodity.
Findings by Daily Sun revealed that most retail outlets in Lagos, Ibadan, Enugu, Aba, Jos, Kaduna and Abeokuta are profiteering from the acute shortage of the product with one gallon of kerosene (Four litres) selling for N1,200 from N500. This translates to 140 percent increase.
A source at the Apapa depot told Daily Sun that despite the liberalisation of kerosene, most marketers have suspended importation, a reason he adduced to the current scarcity.
‘‘I can’t remember the last time any major marketer in Apapa corridor imported kerosene. Most of them seem not interested anymore in importing the product. I don’t know the reason for that unofficial action though, because one would have expected that since the product has been liberalised, more players would come in,but the reverse seemed to be the case,’’ he said.
Further findings by Daily Sun, revealed that the Nigerian National Petroleum Corporation (NNPC) is the only entity importing kerosene at the moment.
Recall that the Petroleum Products Pricing Regulatory Agency had in January 2016 (quarter one) increased the price of Household Kerosene from N50 to N83.
The agency had stated that the N83 per litre price applied only to the NNPC, outlets. But regrettably, none of the NNPC retail outlet sold kerosene at the approved price of N83 in quarter one and quarter two of 2016,which ended last Thursday.
Executive Secretary of Nigerian Association of LPG Marketers (NALPGAM), Mr. Bassey Essien, told Daily Sun that the development has led to a disruption in the LPG supply chain leading to the scarcity.
He said the halt in supply chain has led to a 12.5kg cylinder of gas selling for N4, 000 as against the initial price of N2, 300, warning that, if not addressed, the price could hit N5, 000 next week.
‘‘The development has led to the gradual rise of 20 metric tonne of gas from N2.4 million to N4..3 million within a spate of one week. And that is why we are using the opportunity to alert the concerned authorities to the effect of this unpatriotic trend because if we keep quiet, the price may hit N4 million for 20 metric tonne by Friday,’’ he warned.
Essien alleged that officials of the Marine Transportation Department of the Pipelines Products Marketing Company (PPMC) in connivance with a private gas terminal- NAVGAS owned by ALGASCO, a subsidiary of the Vitol Group, are frustrating the efforts of gas marketers to have access to cheap products.
He explained that, rather than vessels berthing and discharging at the PPMC terminal, its officials deliberately create bottlenecks that would make it extremely impossible for vessels to discharge but rather forcing them to use the facilities of the private terminal, which in turn uses the opportunity to hike prices.
But the Executive Director, Supply and Distribution, PPMC, Mr. Justin Ezeala, told Daily Sun that the obsolete state of other jetties was responsible for the current shortage of cooking gas.
Ezeala said priority is given to vessels laden with petrol, diesel and kerosene to the detriment of LPG, stressing that in order not to incur demurrage on such vessels, they were diverted to other terminals to discharge.
‘‘But it remained regrettable that some people can now use of the opportunity of inadequate jetties to inflate prices. We are working with other stakeholders to ensure that the problem is resolved as soon as possible,’’ he said.
You know some of these jetties are over 40 years old and not in tune with modern day technology. But the agency with working with other private sector operators to have more jetties,’ ’he assured
When confronted with the allegation that some PPMC officials were colluding to ensure that vessels were frustrated from berthing at PPMC terminals, he said no PPMC official could be involved in such act.
He, however, promised to launch an investigation into the allegation and ensure that erring PPMC officials found wanting would be sanctioned.
On her part, Executive Vice Chairman of Techno Oil Limited, Mrs. Nkechi Obi, lamented that if the LPG challenge is not urgently addressed, the gains achieved over the years may be eroded.
She said it was disheartening that Nigeria ranks the lowest in the per capita usage of LP) with 1.1 kilograme consumption rate behind South Africa, Morocco and Ghana.
Obi, who is also the President, Women in LPG Global Network (WINLPG) urged government to develop a local pricing template for gas as against the current international pricing regime.
On kerosene scarcity, she urged Nigerians to move to use of LPG, which is cleaner, cost effective and cheaper.
Daily Sun findings revealed further that, part of the disruption in the supply chain could be linked to a case of ‘He who pays the piper dictates the tune’ because the vessel that transports LPG from the Nigerian Liquefied Natural Gas(NLNG) plant in Bonny, Rivers State is owned by a private terminal operator.
But in order to attain a permanent solution, Chairman of Liquefied Petroleum Gas Retailers (LPGAR) branch of NUPENG, Mr. Chika Umudu, urges the Presidency to launch a full scale investigation into the matter.
The association also called on the Minister of State for Petroleum Resources, Mr. Ibe Kachikwu, to intervene in the scarcity of the product which has grounded the retail arm of the business for over one month.
LPGAR, equally wants the Minister of Petroleum Resources, Mr. Ibe Kachikwu, to investigate why Liquefied Natural Gas(LNG) from Bonny in Rivers State, should become scarce and not available, even when it is produced in-country and not imported.
In a swift reaction, President of LPGA, Mr. Dayo Adesina, explained that the disruption in the LPG supply chain was because PPMC terminals were multi product jetties that give preference to petrol ahead of all other products.
He explained that while a vessel of LPG has capacity for 13,000 tones,Navgas storage capacity can only accommodate 8,000 tones,leaving an outstanding of 5,000 tones.
‘‘By the time the vessels returns to NOJ terminal, which is the PPMC terminal, vessels conveying petrol would have berthed. And because PMS takes precedence over all other product, the vessel would have to return to Bonny to load more products, in order not to incur demurrage charge of $45,000. Unfortunately, in the process of this time lag, prices go up,’’ he explained.
Adesina said the challenge at hand, was more of logistics, appealing that depot owners should be responsible enough to allow vessels berth, since NLNG was committed to resolving the impasse.
He said it was worrisome that terminal operators were catching in on the disruption in supply to hike prices.
‘‘When Navgas sold 20 tonne at N3.5 million, when it was the only one that had product, what stopped others from reverting to the old price of N2.5 million, when they equally received products. It is simply a case of racketeering. So no operator should point accusing finger to the other. They are all doing the same thing. But it is not the best for Nigerians because the masses are the ones bearing the brunt,’’ he lamented.
On his part, the Chief Operating Officer (COO) ALPGAM Energy Limited, Mr. Gbenga Falusi,said price instability for LPG was an unpleasant development.
Falusi alluded to the fact, that LPG, though deregulated, should not be abused through the arbitrary increase in prices must not be tolerated by all stakeholders.
He said the 2007 intervention of the NLNG to deepen domestic LPG consumption has recorded positive strides, which, he said is currently being threatened in a subtle manner.
He argued that the inefficiencies in the logistics and distribution chain due to the inability of vessels to berth having loaded in Bonny, calls for concern.
‘‘The huge attention paid to all other petroleum products to the detriment of LPG is of concern to all stakeholders. Just as petrol and all petroleum products are important, LPG is equally of importance because it has gained awareness among Nigerians, and such gains should not be eroded in a hurry.
But in a situation whereby consumers cannot have access to LPG, they will abandon their cylinders and people will lose their jobs, coupled with the attendant effect on investments,’’ he lamented.