Cooking gas market growth questions lack of functional manufacturing plants

The recent scarcity of cooking gas and the attendant frustration by Nigerians in getting the commodity highlights how critical Liquefied Petroleum Gas (LPG) commonly called cooking gas has become to the average Nigerian where capacity to manufacture cylinders remains low.

Nigeria’s LPG market has witnessed massive growth from less than 70,000 metric tonnes consumed in 2007 to the current 400,000MT, a 471.4 percent increase within 10 years. Experts say that consumption is set to hit 500,000 metric tonnes by year.

Nigeria’s manufacturing capacity is still low largely due to high cost of steel, power challenges and freewheeling exchange rate that has seen the cost of production hit the roof. Raw materials for gas cylinders are imported and they suffer 40 per cent duties and tariffs.

 “We had two cylinder manufacturing plants that shut down because the flat steel became extremely expensive and the cost of production became so high that they couldn’t compete with cheap import,” Dayo Adesina, president of the Nigeria LP Gas Association (NLPGA), the umbrella body of all stakeholders in the Liquefied Petroleum Gas sector in the country.

Adeshina called on the Federal Government to put in place intervention funds to encourage the manufacture of cylinders in the country to stem the loss of about $10m being spent annually to import them.

The consequence of this situation is increased importation of gas cylinders and the use of expired gas cylinders which pose risk of leakage and endangers life and property.

“We believe there is need for more sensitization of the importance and relevance of the usage of LPG, which is a factor for the pursuit of a cleaner energy that is also affordable in such a time as this where it is expedient for one to minimize expenses,” Basil Ogbuanu, President of Nigerian Association of LPG marketers, NALPGAM said at a recent stakeholder conference.

Industry operators call for a policy that will drive the sector.  “There is an urgent need for an LPG road-map in Nigeria that would drive development and growth in the market, otherwise, there would be limitations to the attainment of the desired position that should be seen,” said Ken Abazie, corporate services and strategy, Techno oil Limited at a stakeholder conference recently.

Nigeria currently relies mostly on gas from NLNG to meet local demand but even that suffers from delays due government’s decision to prioritise petrol in discharge to jetties and limited number of jetties and terminals.

 “In Lagos, there are three coastal terminals; Navgas is the biggest (8,000 tonnes); PPMC’s North Oil Jetty has capacity for 4,000 tonnes; and Nipco is 4,500 tonnes. Of those three terminals, only one is a dedicated LPG terminal,” Adeshina said highlighting some constraints that need to be critically addressed.