The Nigeria LNG Limited has accused some marketers of contributing to the sharp rise in the price of cooking gas by buying liquefied petroleum gas from the company at prices between N800 and N900 per kilogramme and selling it for as much as N2,400/kg in the retail market.
The Managing Director and Chief Executive Officer of NLNG, Adeleye Falade, disclosed this during a recent media briefing in Lagos, where he attributed the price spike to supply shortages, artificial scarcity and distortions in the distribution chain rather than the company’s pricing.
According to him, when the retail price of LPG climbed to N2,400/kg, NLNG was selling the product to buyers at between N800 and N900/kg. He said the price was supposed to be in the range of N1,000 to N1,200, going by the recommendation of the Nigerian Midstream and Downstream Petroleum Regulatory Authority.
“When the product was being sold at N2,400 in the market, guess how much they (marketers) were lifting it from us? It was between N800 and N900 per kg. And NMDPRA recommended that by the time you put in transportation costs and all other things, it shouldn’t be selling more than N1,000, N1,100 or N1,200. So there’s also some distortion that happened on the sales side, which I know the regulators are working on right now to get control of it.”
The price of cooking gas jumped from below N1,000 per kg in May to as high as N2,400, pushing many households back to unclean cooking. Falade said investigations by the company showed that some buyers were stockpiling LPG instead of distributing it to retailers, thereby creating artificial scarcity that pushed up prices.
He said NLNG recently engaged one of the four largest consulting firms to assess its off-takers and determine their capacity to distribute LPG effectively, saying their findings showed that some off-takers were not selling the product immediately to retailers.
“Recently, we had to get one of the big four consulting firms to do an assessment of all our off-takers, looking at things like ‘Do you have your storage facilities? How much are you able to bridge at the retail level? And so on. What we discovered was that we have more than we’re able to satisfy, so we had to introduce a round order and give priority to off-takers that have the ability and the network to be able to get to retail.
