The country braces for a possible cooking gas scarcity as the cost of the commodity soars to an all-time high of ₦1,000 per kilogram, from its previous rate of ₦750.
Many Nigerians find themselves in a frantic search for alternative cooking methods due to the sudden gas price surge. Experts stress the urgency of addressing this issue to prevent a potential full-blown crisis.
Experts point to a combination of factors as the cause of the price surge, with the weakened naira, inadequate bulk storage, and terminals spread across Lagos, Edo, Delta, and Cross Rivers playing significant roles.
Findings by Africa Today News, New York, have shown that extended queues have reappeared at gas filling stations in specific parts of Lagos and Ogun. Consumers are encountering challenges in securing the product, while in Kwara and Osun State, it remains priced at ₦850 per kilogram at the time this report was filed.
Experts have voiced concerns that companies responsible for importing the product might be stockpiling it, driven by expectations of an imminent price surge.
The international market is grappling with a dearth of vessels to transport the product, which has in turn escalated the expenses associated with chartering vessels. Forecasts indicate that prices are likely to surge in the approaching winter.
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Citing Spark Commodities in a Bloomberg report, the current daily cost of chartering a vessel stands at $70,500. However, due to the scarcity, this rate is projected to surge to $206,750 per day this month and reach $284,750 per day in November.
As of August 2023, the Nigerian Association of Liquefied Petroleum Gas Marketers (NALPGAM) had indicated that there was a possibility of cooking gas prices rising, with the foreign exchange rate and international market activities being contributing factors.
The association pinpointed various factors, such as rising global prices, substantial tax rates, vessel expenditures, forex shortages, and naira devaluation, as driving forces behind the forthcoming price review.
In a conversation with journalists, the President of NALPGAM, Olatunbosun Oladapo, emphasised the need for the government to enhance domestic product supply and regulate the influence of middlemen and terminal operators to prevent exploitation due to exchange rate fluctuations.
During a discussion with the Press, Kelvin Emmanuel, the Chief Executive Officer of Diary Hills Limited, stressed that the rising demand for cooking gas among Nigerians, particularly for powering generators and cars, is resulting in a higher per capita consumption.
Speaking on the long-term effect of the scarcity on Nigeria’s economy, Emmanuel said: ‘The long-term effect of scarcity because of the shortage of bulk storage terminals, companies in the midstream importing product are hoarding for the purposes of price speculation and FX volatility, is that prices will continue to rise per KG.’
Memunat Alao, a gas retailer located in Lagos, shared with Newsmen that, in her observation, several companies are storing the product, fueled by speculations that prices could rise beyond N1,000 per kilogram.
Idayat Bakare, a consumer in Ogun State, disclosed that on October 1, 2023, cooking gas was available, albeit at a rate of N1,000 per kilogram. However, the scenario shifted drastically the next day, with the product becoming extremely scarce, hindering her ability to make a purchase due to prolonged queues.
Habeeb Jaiyeola, a Partner with PwC, pointed out that global market developments have a direct impact locally and encouraged additional stakeholders to consider participation in the sector.
His recommendation to the government was to leverage increased supply to lower prices and alleviate the impact of the hike. Additionally, he urged the government to take measures in other areas to ease the situation.