LPG demand up 55% in three months highlighting growing domestic supply gap

Nigeria imported and distributed 165.71million litres of Liquefied Petroleum Gas (LPG) between April and June 2018, a 55 percent increase from 107.14million litres recorded in the first quarter of 2018 which highlights a growing supply gap by the Nigeria Liquefied Natural Gas Company (NLNG) to the local market.
This is beaming a light on Nigeria’s plan to support domestic consumption of LPG through the creation of N60bn fund, a policy waiting on government’s action.
According to data from the National Bureau of Statistics, the months of April 2018 recorded the highest volumes of LPG imported into the country at 59.89 mln litres while the lowest volume was imported in June 2018. But this is proving insufficient to fill a yawning market where consumers are being persuaded to dump firewood and charcoal.
Since 2007, Nigeria’s LPG consumption has grown from 70,000MT per annum to over 600,000MT per annum in 2016. Fifty percent of this supply has come from the NLNG according to the company’s record. Marketers are filling the gap by ramping up importation from neighbouring countries but there are concerns that this gap would worsen.
“Nigeria’s LPG market is growing very fast and this increase is as a result of the import parity differential on imported LPG against domestic LPG,” Ifeanyi Uwandu, a frontier and emerging markets clean energy business expert and the founder of Kiakia Gas Nigeria Limited, an energy solutions service provider in Africa told BusinessDay by phone.
The Federal Government last year approved a national gas policy which it claimed would establish  medium to long-term targets for gas reserves growth and utilisation and record strategies to be pursued to ensure the successful implementation of the policy in accordance with Nigeria’s national socio-economic development priorities.
It was also meant to create a development model for domestic LPG market with a view to successfully ensuring the transformation of the LPG sector. The strategies that would drive the policy according to the Federal Government were to make the product available by ramping local production, affordable by cutting taxes, accessible by leveraging on existing distribution chains of other industries, and acceptable by identifying and engaging with key influencers including traditional leaders and religious groups to promote usage.
The government has recorded progress in driving accessibility with campaigns and affordability by removing Value Added Tax (VAT) on domestic LPG, but it is yet to move the needle on a funding plan for the sector.
“As a medium term strategy, a blend of 40% import content of cylinders and 60% local manufacturing content is expected by the 3rd to 4th year of the policy while a target of 100% manufacturing of local cylinders is expected to be achieved within 5 years.
“To support the goal of improving the development of LPG infrastructure such as cylinder manufacturing plants, mini – gas plants/skid plants, gas plants and trucks, an LPG Availability Gas Intervention Fund of Sixty Billion Naira (N60,000,000,000) will be established by the Government,” it said in the policy document. The government is yet to implement this.
The Federal Government plans to encourage increased LPG usage in power, generation, autogas, and industrial applications towards the attainment of Five Million (5,000,000) MT utilisation in 5 years.
NBS data indicates that acceptance is growing nationally. “State-wide distribution of truck-out volume for Q2 2018 showed that 105.49mln of Liquefied Petroleum Gas (LPG) was distributed nationwide during the period under review with Lagos recording the highest quantity of 8.7million litres in the period.
Olufola Wusu, an energy lawyer has called on the government to develop LNG for local market to use gas as driver for the economy.  “The domestic market for gas is experiencing severe energy shortage with power plants often going offline due to gas supply constraints, this is why actions are required,” Wusu told BusinessDay in a previous comment.

ISAAC ANYAOGU