The President of the Nigeria Liquefied Petroleum Gas Association (NLPGA), Mr Nuhu Yakubu, has attributed the decrease in the retail price of cooking gas in the country to the fall in product prices on the international market.
According to NAN, Yakubu disclosed this during an interview on Thursday in Lagos.
He was speaking against the backdrop of a reduction in the price of Liquefied Petroleum Gas (LPG) in Nigeria.
According to the U.S. Energy Information Administration, the current price of natural gas dropped by 76.1 per cent to 2.10 per one million British Thermal Units (BTU) on May 31 from 8.78 per one million BTU.
Yakubu said that the price of LPG dropped because the international reference price in USD had dropped amidst a relatively stable Naira exchange rate.
“The ripple effect is felt locally in retail pump price reductions.
“The current price of LPG depends on location; as you know, it’s operating in a deregulated market.
“However, the price averages N730 per kilogram or N417 per litre,” he said.
Yakubu, also the Group Chief Executive Officer of Banner Gas Ltd., said that the government had no role in LPG pricing except to levy taxes on the product.
He said: “So, the government can only help reduce taxes.
“The government can also help address the issues challenging gas supply as feedstock to major LPG producers like NLNG.
According to him, it will enable increased production of LPG and domestic supply.
“With improved domestic supply comes better retail pump pricing.”
Similarly, Mr Oladapo Olatunbosun, the President of the Nigerian Association of Liquefied Petroleum Gas Marketers (NALPGAM), said that the reduction in the price of LPG was a commendable effort.
Olatunbosun said that the association was monitoring the development, watching the decline in market price while believing it would continue.
“All our assessments and recommendations are reserved until we have a full cabinet of the new government,” he said.
The cost of cooking gas in the retail market had been reduced by 15 per cent.
Between April and May, the price of refilling a 12.5kg cylinder of Liquefied Petroleum Gas (cooking gas) has reduced between 12 per cent and 10 per cent on the back of lower crude oil prices and a decline in international gas prices.
A survey in Lagos indicated that the price of cooking gas is trending downward to N8,700 from N10,500 in April and May.
Mr Chinedu Okonkwo, a gas retailer at Somolu, Lagos, said that the price fell from N850 per kg by April 30 to N700 and N750, but that still sold at N900 per kg at other local gas retailers in the area.
He said that the development eased some of the burdens on cash-strapped households, who had been dealing with a hike in the price of the commodity since January 2022, coupled with the surge in petrol prices due to subsidy removal.
Okonkwo said that LPG was an international commodity, with about 65 per cent of domestic gas coming from imported sources.
Mrs Sekinat Lawal, a gas retailer at Ikeja, said that gas prices in the country were linked to an international benchmark called Mont Belvieu, which had been on the downward slope for the last couple of months.
She said that Mont Belvieu was the site of the largest underground storage facility for liquefied petroleum gas in the U.S.
“The U.S. LPG market pricing indicator is driven primarily by the Mont Belvieu market and reported daily by the U.S. Energy Administration,” she said.
Lawal said that imported gas prices were declining and therefore reflected in the local market.
Another retailer, Mr Francis Evans, Managing Director, Floppy Oil and Gas, said crude oil prices typically influence domestic LPG prices in the international market, adding that as the price of crude oil rises, LPG prices often follow suit.
“The currency exchange rate is another factor, as importers require dollars to import LPG.
“The rise in the cost of local and international shipping and the surge in demand for LPG during a cold winter are also factors affecting the price of LPG,” he said.
“The United States of America and Argentina are the major suppliers of gas to Nigeria.
“But the Russia-Ukraine war, which started in February last year, triggered a surge in gas prices in these countries, especially the U.S. But recently, the prices have been falling,” he said.
