Marketers Blame Supply Hiccups As Cooking Gas Prices Surge Again

The prices of Liquefied Petroleum Gas (LPG), commonly known as cooking gas, have surged again across major Nigerian cities, with marketers attributing the hike to persistent supply chain disruptions.

Consumers battling the recurrent price spikes lament the increased cost burden amid rising living expenses.

Although there was a price hike in cooking gas that went up to about N2,000 or more per kilogramme a few weeks ago, it later went down to about N1,000 per kilogramme. But from last week, the price has been rising again, particularly in Lagos, Ogun, Oyo, and some other states in the South West.

LPG prices also went up in some areas of the Federal Capital Territory with a consumer telling one of our correspondents that he bought a kilogramme for N1700 in Lugbe on Saturday. It was also gathered that some retailers were selling the product for between N1800 and N2,000 in the Durumi area of the FCT.

The Major Energy Marketers Association of Nigeria (MEMAN) attributed the current price increase to supply hiccups.

At the weekend, LEADERSHIP went round gas stations in Lagos and Ogun states, and findings showed a recent price surge.

A food vendor at Anifowoshe in Ikeja, Lagos, Modinat Lanre, expressed concern over the recent surge in cooking gas prices.

“The price keeps going up. I use gas a lot for cooking. During the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) and Dangote Refinery issue, I was buying it for N1,500 per kilogramme. After the matter was resolved, it dropped to N1,100 per kg. However, to my surprise, it has risen again to N1,300 per kilogramme. We have no choice but to buy it because it’s essential for our business. Whenever we come here and they tell us the price, we just pay, whether it goes up or down,” she said.

In Rivers State, the prices of cooking gas per kilogramme are not the same in parts of Port Harcourt, the state capital.

A survey carried out by LEADERSHIP in Old Port Harcourt Township revealed that a kilogramme of cooking gas is sold at N1,200.00 per kg at gas filling stations, while other roadside retailers sell at N1,600.00.

We observed that in the Eagle Island area of the Rivers State capital, cooking gas is sold at N1,035.00 per kilogramme, while roadside shop owners sell at N1,400.00 per kilogramme.

Jamiu Fasasi, who visited a filling station to refill his cylinder, was shocked by the new rate.

“N1,300 per kg? But the price had come down before. I bought it last Sunday for N1,100 per kilogramme. Why has it gone up again?” he queried.

Another customer, who came from the Opebi area to Ikeja to refill gas, when asked about the price fluctuation, remarked, “Is it N100 or N200 increase that’s making you complain? Come to Opebi, my area, where they’re selling it for N2,000 per kg and above.”

A wholesale buyer and reseller confirmed the upward trend. “Yes, my brother, the price is rising, but we’re managing it like that,” he said.

When asked about the cause, he attributed it to lingering issues between Dangote Refinery and PENGASSAN.

“Their dispute disrupted the market, so price fluctuations are expected. But I believe things will stabilise before December.”

In Atan, Ogun State, Bukayo Ojo reported purchasing gas at N1,400 per kg, noting that it was the cheapest option available in her area.

Meanwhile, speaking on the market instability, the executive secretary of the Major Energy Marketers Association of Nigeria (MEMAN), Mr. Clement Isong, attributed it to supply challenges.

Isong, who spoke to LEADERSHIP on concerns about the inability to create market stability, expressed some reservations about the system creating a buffer at the moment due to existing supply challenges.

However, he expressed optimism that, in the long term, there will be moderation and stability.

The executive secretary cited the efforts of the Decade of Gas, which has laid out a pathway to potentially transform the market.

Our correspondent reports that the Decade of Gas initiative was launched in March 2021, and one of its cardinal actions explicitly aims to address the country’s Liquefied Petroleum Gas (LPG) shortage by promoting the widespread domestic use of gas for cooking and industrial purposes.

Key aspects of the initiative to tackle the LPG shortage include boosting local supply by encouraging domestic LPG production and supply to reduce the heavy reliance on imports—which account for around 60 per cent of consumption—and shielding the market from volatile international prices and foreign exchange issues.

The initiative also focuses on developing critical gas infrastructure, including pipelines, storage facilities, and transportation networks, to ensure the efficient and widespread distribution of LPG across the country, especially to rural and semi-urban areas where it is currently scarce.

All these interventions, according to Isong, will prevent market shocks and improve supply chain efficiency.

The government has launched programmes under the initiative to distribute LPG cylinders, with a target of reaching five million households by 2030, to encourage the switch from traditional cooking fuels like firewood and kerosene to cleaner LPG.

The initiative is supported by policy changes, such as the removal of Value Added Tax (VAT) and customs duties on imported LPG and associated equipment, to make it more affordable and attractive to consumers and investors.

However, despite these efforts, challenges such as inadequate infrastructure, high prices (due to import reliance and forex fluctuations), and pipeline vandalisation continue to hinder the full realisation of a sufficient and stable LPG supply under the initiative. Meanwhile, LEADERSHIP checks show that marketers are not willing to take the risk of importing the product.

One of the importers who craved anonymity said the company took a risk to import 8,000 metric tonnes when Dangote Refinery had issues with labour unions and was lucky enough to sell off the stock.

He said now that the refinery has resumed LPG production, marketers would not like to take any further risks.

The source further explained that there was even a time when 10,000 tonnes sold at N16 million only for the refinery to crash the price to N14 million, and marketers recorded huge losses.

Our correspondent also gathered that the importation of gas would be more expensive now that most European countries are importing the product massively.

Our sources attributed the rise in price to increased demand because of the festive period of weddings, parties, and activities that require much cooking, thus creating a major gap in supply and demand.

It was also revealed that most companies had exhausted their allocation from the Nigerian Liquefied Natural Gas (NLNG).

“Every year the NLNG offers allocation to offtakers, and by this time such allocations are exhausted. Due to fears of possible conflict in pricing, such companies are not willing to import LPG,” he said.

A survey of Abuja retailers showed that cooking gas still sells for as high as N1,800 per kg, especially at roadside retail outlets.

The price of cooking gas skyrocketed from N1,100 per kg to as high as N1,800 per kg in various outlets following the recent strike by PENGASSAN.

Following the recent price hike, the federal government mandated the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) to intensify LPG depot monitoring to prevent product hoarding.

The minister of state for petroleum resources (Gas), Ekperikpe Ekpo, said the recent price surge was primarily caused by two factors involving the industrial action by PENGASSAN at the Dangote Refinery.

Ekpo added that the other factor was the ongoing maintenance activities at the Nigeria LNG Train Four facility, which reduced the volume of LPG available in the domestic market.

He, however, gave the assurance that operations at the Dangote Refinery had resumed, with loading of LPG to the domestic market already ongoing.

The minister also said the Bonny River Terminal operated by Seplat Energy had commenced loading, while the Nigeria LNG was gradually restoring normal operations as maintenance neared completion.

A source in the office of the Minister of State for Petroleum Resources (Gas), who sought anonymity, confirmed to our correspondent that the directive that companies producing LPG in Nigeria prioritise the domestic market in their supply before exports is still in place.

“Yes, the directive is still in force, and NMDPRA is tasked with ensuring compliance—and there is compliance. You can also cross-check with the NMDPRA.

Like the minister said in the last press statement, LPG downstream business or retail is deregulated, and what that means is that marketers can import and sell based on what is happening in the international market,” the source added.

Responding to LEADERSHIP’s enquiry, the head of public affairs of the NMDPRA, George Ene-Ita, said, “We operate a completely deregulated downstream sector. Therefore, prices are determined by market forces. Engage dealers and operators for the reasons for this current shift, please. Prices are a function of market conditions in a deregulated environment.”

Meanwhile, a retailer, Kingsley Paul, said that he could not sell below his purchase cost.

“I still have old stock. When the price we buy comes down, we will also sell at a reduced rate. Since the Dangote Refinery has resumed supply, I believe the price will drop when we get new deliveries,” he said.

At one of the major outlets visited, cooking gas was sold at N1,450 per kg.

The manager, who spoke on the condition of anonymity, said they were still selling old stock and expressed hope that the price would reduce once they receive new supplies.

Meanwhile, Nigerians have continued to urge the government to find a lasting solution to the rising cost of LPG, as many households rely on it for daily cooking.

Christian Chibuzor, an environmentalist, said it was a good thing the government was trying to promote the use of cooking gas, but that they need to make it affordable for all Nigerians.

“Using cooking gas will help lower carbon emissions compared to traditional firewood, charcoal, or kerosene, which will help mitigate climate change and improve air quality, thereby reducing respiratory diseases.

“However, if the price remains high, the transition to cooking gas will be difficult to achieve, especially in rural areas. Therefore, the government must demonstrate commitment to reducing the price,” he said.

Marketers Blame Supply Hiccups As Cooking Gas Prices Surge Again