The Nigerian Liquified Petroleum Gas, LPG market has been experiencing steady increase for over a decade. Between 2007 and 2018, the Nigerian LPG market capacity was reported to have increased from 70,000 MT per annum to 600,000 MT per annum. The growth recorded was made possible through government policies, such as the deregulation of the market, and partnerships with the private sector.
The Nigerian Liquefied Petroleum Gas Association, NLPGA, has set a new growth trajectory to increase the annual Nigerian LPG demand from 600,000 MT to 5,000,000 MT by 2029. This growth in demand must be met by an equal growth in supply. This begs the question of where the supply will originate from.
Nigeria is a net exporter of LPG, with local LPG demand equalling about 23 per cent of local LPG production. Although Nigeria produces more than it consumes, it is dependent on foreign LPG. If this trend persists, then the growth in the Nigerian LPG market will be driven by imported LPG. It is therefore important to examine the effects of the current situation and determine whether it is sustainable based on 2019 events.
Out of the 500,000 MT of LPG that was imported into Nigeria in 2019, 300,000 MT came from the United States of America making 72 per cent of total LPG imports. Equatorial Guinea came in second place, supplying 60,000 MT, which was 12 per cent of total LPG imports.
Given the slow growth rate of the market, the Nigerian National Petroleum Company Limited, NNPCL, has called for clearer policy framework, incentives and more investment in the LPG market to deepen its use in Nigeria.
Speaking, at the Nigerian Liquified Petroleum and Gas Association, NLPGA, last year, the Group Chief Executive Officer, NNPCL, Mele Kyari, said that the growth in the LPG market over the last 15years could not have been possible without the collaboration between upstream gas suppliers, NNPCL and other private sector players.
He stated: “The country currently produces about 2million tons of LPG annually. Domestic LPG protection from NLNG, NPDC, mobile operating and gas processing plants, constitutes about 25 per cent of annual consumption while 55 per cent is being imported to the country.
“There is a need for policies, incentives and investment in growing the Nigeria LPG market to make cleaner fuel available, accessible and affordable not only for household cooking but used in auto cars, static power generation, heating and cooling, agriculture and industry.”
On the NNPCL, gas profile he said, “The company is fully aligned with the national gas expansion program and the national LPG expansion and implementation of the federal government of Nigeria.”
Despite the efforts, the National Bureau of Statistics (NBS) just disclosed that the average price of 5kg of cooking gas rose year-on-year (YoY) by 22.03 per cent to N4, 610.48 in February 2023 from N3,778.30 in the corresponding period of 2022. This comes as the average retail price of a litre of petrol increased YoY by 43.62 percent to N264.29 in March 2023 from N185.30 in March 2022.
In its Cooking Gas Price Watch for March 2022, obtained by Oriental News Nigeria, the NBS also stated that on a month-on-month, MoM basis, the price of 5kg of cooking gas rose by 0.22 per cent to N4,610.48 in March 2023 from N4,600.57 in February 2023.
The report showed that Kwara State recorded the highest average price for refilling a 5kg cylinder of Liquefied Petroleum Gas (Cooking Gas) with N4,962.87, followed by Abuja with N4,940.00 and Adamawa with N4,915.00.
On the other hand, Rivers recorded the lowest price with N4,204.45, followed by Abia and Anambra with N4,220.15 and N4,232.75 respectively.
