The Executive Secretary/Chief Executive Officer, Nigerian Association of Liquefied Petroleum Gas Marketers, Mr Bassey Essien, speaks to ’FEMI ASU on vital issues in the country’s Liquefied Petroleum Gas (cooking gas) industry
Last year, cooking gas consumption in Nigeria reached one million metric tonnes of LPG for the first time. The country’s LPG consumption has been low for years despite the availability of abundant gas reserves; what is responsible for this?
We have seen some improvement in the consumption level in recent years. In the early year 2000, we were consuming about 0.5kg per capita, and today it has risen to about 5kg per capita consumption, which is an improvement.
In 2007, consumption was about 50,000 to 70,000 metric tonnes, compared to over one million metric tonnes now.
We expect more improvement but there are several factors that are still limiting growth in the LPG sector.
Yes, we are well-endowed with natural resources; our domestic consumption of LPG was supposed to have been sourced from the refineries.
Even the Nigeria LNG Limited just increased its domestic supply of LPG from 350,000 metric tonnes to 450,000 MT this year.
If consumption has increased to over one million MT, and NLNG is supplying 450,000 MT per annum, then the difference should come from somewhere.
Most of the gas we consume is imported, with the associated high costs, based on foreign exchange availability.
So, when gas is readily available, and supply outstrips demand, then the price will hover at a very comfortable region. But when at every point in time, the demand outstrips supply, the price will go up.
Again, the commodity comes into the country at a high cost. Sometime last year, a 20-metric-tonne truck was sold for N3.6m. As we speak now, the price is N5m-N6m. And when the commodity is sourced by the marketers, they too have to make a little margin for their investments. That is why most times, we are always advocating full domestication of LPG in the country.
What NLNG is producing is enough to meet our demand but NLNG is not a wholly-owned Nigerian entity. It is a joint venture, and it was actually set up for export of gas.
It is just that the comatose nature of the refineries made the NLNG to be mandated to look inwards, at least make available to the local market some proportion.
Most of the gas produced here is exported and we still buy them back and import them back into the country.
Awareness too is still an issue. As an association, we have always been championing awareness campaign to promote the use of LPG.
In all the states or local governments we normally go to, we distribute free cylinders to people in the rural areas because as it is, we have not got to that level of awareness that virtually every household should have gas.
Thirdly, the startup point for a household to convert to the usage of LPG is still on the high side.
Government has been touting N30,000 as minimum wage. How many companies actually pay that?
For you to start using gas, you need to acquire a cylinder, probably a table-top gas cooker, regulator and hose. Putting all these things together takes more than one month’s salary.
The starter pack for households to covert to gas is expensive. A lot cannot afford it. That is why we see the introduction of smaller-sized cylinders.
Apart from the NLNG, some other companies are producing LPG but they are exporting it. If they are compelled to send it to the domestic market, definitely it will go a long way in bringing down the price.
If the price is reasonable, more people will want to use LPG, going by the comfort and the health benefits attached to it.
Are you saying the government should compel producers of LPG to supply the product to the domestic market?
The point is: who else can make them do that? The government should put in place incentives that will make gas available.
Before the NLNG started supplying the domestic market, the government had to step in during the administration of President Olusegun Obasanjo, and since then, the NLNG has been increasing the supply. But the level of increase is not commensurate with our population and demand.
That is why we are saying if there is a way the government can give incentives to the producers to make sure that every molecule of LPG produced is domesticated, definitely there is a market here for it. We are a population of over 200 million, and I am not sure we are up to 50 million consuming gas.
So, if we can make the environment conducive, the product readily available, accessible and affordable, the potential of the market is enormous.
What are the major challenges facing LPG marketers and other stakeholders in the industry?
In recent times, we have been having a serious issue with the Petroleum Products Pricing Regulatory Agency, which levies every quantity of gas that comes into the country and is being sold. And we asked: Why are you levying this commodity? You don’t have any value creation in the sale or marketing of the product and you are imposing a levy on the gas that is loaded, and, of course, this levy has to be passed on to the consumers. There is multiple taxation.
Today, some of our members in Delta State are complaining bitterly. These companies are paying tax (PAYE) to the state government and income tax to the Federal Government. But the state imposed a levy on gas plants; it started with a levy of N50,000 in 2020. Because some paid, the state increased the levy to N100,000 in 2021. What special services are you providing for them that you are levying them?
So, these are some of the factors responsible for cooking gas price hike. Apart from the exchange rate, the international price and the logistics, multiple taxation is a problem. Every state government now is imposing levies on gas plant owners.
Another challenge is the state of the roads. Trucks are used to take LPG to gas plants. For example, how long does it take a truck to come into Lagos, load the product and go? Some could say days or even weeks.
This causes loss of revenue, manpower and business time. The roads are bad. These trucks have accidents rampantly. There are also issues of insecurity and inconsistent policy of the government. In some states, they make it so difficult for you to get approvals if you want to set up a gas plant.
An increasing number of Nigerians are adopting the use of cooking gas across the country; what safety measures should retailers and households put in place to avoid incidents?
When we do our awareness campaign, we go ahead to demonstrate how to use cylinders and the gas itself. Some people don’t even know the appropriate procedure to light a gas appliance. Some will switch on the gas first before they start looking for matches or lighter. By the time you open the valve or the nozzle for the gas to flow through, it is in the air, and before you strike the match, the gas has spread.
Once gas leaves that container and is not properly attended to, when there is any source of ignition, disaster comes. If you are using gas, first of all, you strike the match and move it close to the burner and then turn the knob.
We are also telling people that it is not safe to put the cylinder in the kitchen. Put the cylinder outside the house, get a hose, and pass it into the house and make sure the nose is not in a position where rats could damage it. And make sure you buy the proper hose; gas has specialised hoses, and these hoses have expiry dates.
Check the regulator periodically to ensure that it is working very well because gas must not leak out of the cylinder. And for those that can afford it, keep a fire extinguisher nearby.
When you are cooking, if there is anything, make sure there is enough ventilation – open the windows. If there is a leakage, don’t switch on any light or anything that could cause a spark.
Cylinders also have expiry dates, and they must be adhered to. You check the integrity of the cylinder every five years. Cylinders have an expiry date of 15 years here. Every five years, the cylinder must be tested.
If you are buying a cylinder, on the neck of the handle is written the year of manufacture. Add 15 years to that and you get the year it will expire. When it gets to that time, that cylinder should no longer be used. But because of the costs of some of these things, there are some cylinders in circulation that have been in use for about 40 years. And this is what we are trying to preach against. If we all maintain our usage within the safety measures provided, gas is as safe as anything.
There is a proliferation of cooking gas retail shops across the country; is this a cause for concern?
In the distribution value chain, the retailers have their own part to play – they go to gas plants to fill their cylinders and take them to their shops. For you to become a retailer, you must be licensed by the Department of Petroleum Resources and the DPR has said for a retailer to be licensed, a retailer must be recommended by a marketer – an LPG plant – and meet all the requirements necessary to qualify for a licence.
We need a lot of them because they bring gas closer to the households, but this must not be bastardised. Our association work in conjunction with retailers; we organise periodic training programmes, which are facilitated by DPR-certified consultants and trainers.
We tell them the rudiments of the business and the safety consciousness that should be applied whenever they are selling. This issue of decanting that has become hydra-headed which is illegal should be discontinued.
Most of the retail shops don’t even have licences to operate, and the DPR itself may not have the muscle to be able to go round to know those who are not doing the right thing. That is an issue. When we see illegalities, we draw the attention of the government to such things.
PUNCH
