PPPRA, LPG marketers on collision course over proposed pricing template

Petroleum Products Pricing Agency (PPPRA) and marketers of Liquefied Petroleum Gas (LPG), otherwise called cooking gas, are heading for a collision course on account of two letters emanating from the agency asking the marketers for certain information concerning their operations, which are expected to be used in the proposed pricing template.

The two letters were sent to the marketers within a space of six days, with one requesting them to supply information on the cost build up in the LPG value chain for domestic market, as applicable to each of the companies.

The cost elements include unit measurements, production cost per unit, margin, distribution margin, freight, NPA charges, jetty charges, and storage cost.

Others are supplier margin, land transport cost/ margin, taxes/VAT, financing, retailers margin, and other charges.

The marketers, who are however suspecting that the agency is trying to introduce subsidy to the sector, said apart from the fact that they had all agreed to ignore the letters, they also said they would resist any attempt by the agency to introduce subsidy to the LPG market, saying the market was already deregulated.

The market is already deregulated and any attempt by the agency to want to introduce subsidy through the back door, simply because it wants to be seen as doing something, would be resisted, one of the marketers said.

One of the letters was dated April 20, 2015, and signed on behave of the executive secretary by one S.A. Salman, assistant general manager, Alternative Energy.

The letter, which was titled “Request for input into the proposed LPG pricing template,” stated thus: “I wish to draw your attention to the Petroleum Products Pricing Regulatory Agency (PPPRA) Act No 8 of 2003, which empowers the agency to regulate the supply, distribution and pricing of petroleum products in the country.

“In pursuance of the above mandate and sequel to the Minister’s of Petroleum directive on the im- plementation of Liquefied Petroleum Gas (LPG) development in Nigeria as a strategy for switching from kerosene to LPG, your company, being one of the critical stakeholders in the LPG subsector, is requested to provide some informations that will lead to the development of an acceptable template for the LPG Market in the country.

“Consequently, your company is hereby to supply information on cost build up in the LPG value chain for domestic market by using the cost elements stated above.”

The marketers were directed to respond to PPPRA two weeks after the receipt of the letter, but BusinessDay
investigation revealed that the marketers decided to ignore the letter.

They accused the PPPRA of not doing anything towards the growth and development of the sector and cannot come at this time asking for cost elements for the purpose of pricing template.

The other letter, written on the April 13, 2015, was fashioned in the same pattern as the one above, titled “Collation of Data on LPG Consumption nationwide.”

It read: “The pursuance of the mandate given to the agency by PPPRA Act No 8 of 2003, and sequel to the Minister’s of Petroleum directive on the implementation of Liquefied Petroleum Gas (LPG) development in Nigeria as a strategy for switching from kerosene to LPG, PPPRA is embarking on the development of data base on LPG consumption.”

Based on this, a weekly data on supply, retailing and distribution from the marketers are expected to be forwarded to PPPRA.

OLUSOLA BELLO