Cooking Gas Price Surges to N1,500/kg Amidst Supply Challenges

The price of Liquefied Petroleum Gas (LPG), commonly known as cooking gas, has surged to N1,500 per kilogram, sparking concern among consumers across Nigeria. This sharp increase in the cost of cooking gas is hitting households particularly hard, especially those who rely on it for daily cooking.

Rising Cost of Cooking Gas

As of October 14, 2024, retail outlets in Ogun and Lagos States have reported prices of N1,500 per kilogram for cooking gas, with the average price of refilling a 12.5kg cylinder in Abuja now reaching N17,000. This represents a significant 41.6% price hike, leaving many consumers worried about the financial strain on their daily living expenses.

Root Causes: Import Dependence and Limited Local Production

According to Suresh Kumar, the Managing Director and Chief Executive Officer of NIPCO Plc, Nigeria’s dependence on imported LPG is a major factor contributing to the price surge. Over 60% of the cooking gas consumed in Nigeria is imported, exposing the market to fluctuations in international pricing and foreign exchange rates. Currently, less than 40% of the 1.5 million metric tonnes of LPG used annually in Nigeria is produced locally.

Kumar emphasized that this import reliance makes the Nigerian market vulnerable to external shocks, such as global oil price changes and currency devaluation, leading to increased costs for consumers.

The Hope for Domestic Refining

Despite the price hike, there is optimism for a future reduction in LPG prices. The recent commencement of operations at the Dangote Refinery, along with other domestic refineries, offers hope for greater local production of cooking gas. The ability of these refineries to source crude oil in local currency is expected to drive down the overall cost of LPG in Nigeria.

Kumar noted that with increased domestic production, Nigeria will be less dependent on imports, which will help stabilize prices and reduce the impact of foreign exchange fluctuations on LPG costs.

Industry Recommendations: Increase Propane Conversion

At the 2024 National Conference of the Nigerian Association of Liquefied Petroleum Gas Marketers, Kumar called on the Federal Government to encourage companies like Chevron to convert more of their propane output into butane, which is more suitable for domestic use. This, he argued, would increase the availability of locally produced LPG and help drive prices down further.

Consumer Implications

For the average Nigerian household, the rising cost of cooking gas has significant implications, particularly for those who already face financial challenges. The increased prices may push some consumers to revert to alternative cooking methods, such as using firewood or kerosene, which have their own environmental and health risks.

Outlook for the Future

The promise of more local LPG production, spearheaded by the Dangote Refinery and other local refineries, offers hope for lower prices in the long term. However, the current situation remains a challenge for consumers, with the need for immediate solutions to mitigate the financial impact on households.

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