FG’s LPG policy reduces kerosene importation, consumption by 19%

The Federal Government’s drive to encourage the consumption of Liquefied petroleum gas (LPG) popularly known as cooking gas may be the reason for the decline of household kerosene imports and consumption.

According to the National Bureau of Statistics (NBS), Kerosene importation reduced by 19 percent to 110.7 million litres in the first half of 2018 from 136.7 million litres in the same period of 2017.

“Government is pushing its gas agenda very far. They are using new projects like the 614km Ajaokuta-Kaduna-Kano Gas Pipeline Project to open up or extend the pipelines so that more people will have access to gas and there is also a lot of investments in the gas industry so that people can use it to carry out their projects,” Ayodele Oni an energy partner at Bloomfield Law Practice said.

“Kerosene is one of the by products of gas and also expensive. We have a lot of gas in abundance which is cheaper for us to use. So why are you looking for a more expensive alternative source. Gas is cheaper in the long run, more environmental friendly and more competitive for the economy,” Oni explained

The present administration has been systematically reducing the importation of House Hold Kerosene in a bid to increase domestic consumption of LPG by various homes across the country.

Vice-President, Yemi Osinbajo recently stated in 2016, that Nigeria spent $1billion as subsidy on kerosene in 2015 and stressed that this was because of the massive dependence on kerosene and firewood by millions of households in the country.

“The government had decided to unlock the domestic LPG value chain as this was one policy that the current administration was passionate about since Nigeria had one of the largest gas reserves in the world,” Osinbajo said at a Domestic Liquefied Petroleum Gas Stakeholders’ Forum in Abuja.

The dependence and importation may further decline as the oil and gas industry is creating an enabling environment that would enable investors to contribute their quota towards making Nigeria’s abundant natural gas resources serve as launching pad for the nation’s industrialization take off.

“It is imperative for Nigeria to market its enormous gas resources at the global level because we have to get our industries to work. Without power, we cannot have industrialization in our country. We are therefore committed to making the best use of what we have in terms of gas potentials and ensure that gas, indeed, drives the power sector,” Folashade Yemi-Esan, the permanent secretary, Ministry of Petroleum Resources said at the Nigerian Pavilion on the sidelines of the ongoing 27th World Gas Conference (WGC) which took place in Washington DC, US in June 2018.

The reduction in kerosene importation may have also have negative impact on the its prices as local consumers are complaining about the high prices.

Johnson Chukwu, CEO, Cowry Asset Management Limited said, “Government is doing a lot to encourage the usage of gas as domestic fuel instead of kerosene and this has slowed down its importation which has made the price to be quite expensive, making it compelling for people to see gas as an alternative source of cooking fuel,”

Also earlier in August 2018 , the federal government had agreed to the removal of Value Added Tax (VAT) locally produced LPG from the Nigeria Liquefied Natural Gas company (NLNG). This action will make reduce the cost of locally produced LPG, making it more competitive against imported ones and also encourage investors to go into the manufacture of LPG.

BUNMI BAILEY