Federal government has ordered the Nigerian National Petroleum Company Ltd. (NNPC Ltd.) and Liquefied Petroleum Gas (LPG) producers to halt the export of LPG or cooking gas from November 1 to reduce prices across the country.
The Minister of State Petroleum Resources (Gas), Mr Ekperikpe Ekpo, gave this directive on Tuesday at a meeting with stakeholders in Abuja.
According to the Minister’s spokesperson, Louis Ibah, the meeting focused on the skyrocketing price of cooking gas in the country.
“On the short-term solution, with effect from Nov. 1, 2024, NNPC Ltd. And LPG producers are to stop exporting LPG produced in-country or import equivalent volumes of LPG exported at cost-reflective prices.
“On pricing framework, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), will engage stakeholders to create a domestic LPG pricing framework within 90 days indexing price to the cost of in-country production.
“This is rather than the current practice of indexing against external markets, such as the Americas and Far East Asia, whereas the commodity is produced in-country and Nigerians are required to pay a higher price for an essential commodity the country is naturally endowed with.
“On a long-term solution, within 12 months, facilities will be developed to blend, store, and deliver LPG, ending exports until the market achieves sufficiency and price stability,” he said.
Furthermore, Ekpo explained that the directives were a step towards addressing the underlying challenges and ensuring that Nigerians have access to affordable cooking gas.
He noted that the new measures would enhance availability and affordability to shield Nigerians from the economic hardship caused by the rise in LPG prices.
Recall that, in a bold move to curb the soaring prices, the minister had established a high-level committee in November 2023, led by the Chief Executive of NMDPRA, Mr. Farouk Ahmed, and comprising key stakeholders in the LPG value chain.
However, despite efforts to stabilize the market, prices have remained unstable, recently climbing to N1,500 per kg from an average of N1,100 – N1,250.
What you should know
The continued increase in the price of cooking gas will further pressure household running costs and compound the inflationary woes being faced by Nigerians as retail food businesses could increase their prices.
Furthermore, the hike in cooking gas prices could push vulnerable members of society to abandon gas for firewood or other ‘dirty’ energy sources for cooking and other household activities.
An expert in the field had noted a decline in the volume of gas supplied by the Nigeria Liquefied Natural Gas (NLNG) under the Domestic Liquefied Petroleum Gas (DLPG) scheme in recent months.
Another expert attributed the current price hike to the Federal Government’s failure to follow up on the Butanisation policy of the 1980s.
(Nairametrics)
