Furore over cooking gas, kerosene scarcity
The prices of cooking gas, otherwise known as Liquefied Petroleum Gas (LPG) and Dual Purpose Kerosene (DPK) or kerosene, have gone up, no thanks to scarcity of the products. Though the scarcity and its attendant hike in prices have been blamed on disruption in the supply and distribution chains, AKINOLA AJIBADE writes on the agonies of Nigerians and efforts to remedy the situation.
Since the New Year, Mrs. Rebecca Alesinloye, a domestic user of cooking gas, otherwise known as Liquefied Petroleum Gas (LPG) and kerosene, has been struggling to come to terms with the sudden hike in the prices of these cooking fuels. “I filled my gas cylinder with N3, 500 in December. By first the week of January, the price has surprisingly gone up to as high as N4,500,” Alesinloye fumed. She added that the skyrocketing prices of the products have brought untold financial and physiological pressure on her household.
Narrating her ordeal further, an obviously embittered Mrs Alesinloye, a resident of Surulere, Lagos, told The Nation that when she first visited a gas plant located inside a filling station around her neighbourhood, she had hoped that the price of gas would be cheaper since the festive season was almost over. “But to my disappointment, the price was as high as N5,000,” she lamented. She said she had no choice but to go back to the first gas plant to refill her cylinder. She described the price hike as “unfortunate” considering the economic hardship in the country.
As far as Mrs Alesinloye was concerned, she and other domestic gas users are victims of exploitation by shylock gas sellers. According to her, sellers usually exploit users by increasing the price of the product during festive periods. She accused marketers of being unfair to users, lamenting that this development has compounded the woes of Nigerians battling all odds to survive the economic downturn caused by recession.
She, therefore, appealed to the Nigerian National Petroleum Corporation (NNPC), marketers under the aegis of Major Oil Marketers Association of Nigeria (MOMAN) and Independent Petroleum Marketers Association of Nigeria (IPMAN), Nigerian Liquefied and Natural Gas (NLNG) and other relevant operators to check what she described as “the excesses of the sellers of the two products’.’
Mrs Alesinloye is not alone in her agony over the increase in the price of gas and kerosene.
Mrs. Jennifer Eluko, another consumer, is also furious. She lamented that the price of cooking gas rose since last December in most parts of Lagos. A resident of Abule-Egba, a suburb of Lagos, Ekuko said she usually refills her two gas cylinders ahead of the festive period.
According to her, this was to get round the challenge of artificial scarcity of the product that forces her and other consumers to pay extra. “I usually fill two cylinders ahead of the festive period because I know that sellers would sometimes create artificial scarcity and inflate the price,” Mrs Eluko said.
Another housewife Mrs. Oluyemi Alimi lamented that the sudden rise in the price of kerosene and cooking gas has added to her financial woes. Alimi, who is in her 50s, said since most Nigerians use LPG and kerosene as cooking fuels, they have no choice but to contend with the increase in the prices of the two products.
Even LPG retailers are complaining. For instance, the Chairman, Liquefied Petroleum Gas Retailers (LPGAR), Mr. Chika Michael Umudu, said the scarcity of gas has worsened the problems of low income earners. He said many people have abandoned their cylinders and opted for other sources, such as firewood and saw dust.
The scarcity of the two household cooking fuels has seen their prices hitting the roof. For instance, the price of refilling a 12.5-kilogramme gas cylinder increased by 30 per cent from N3, 000 to N4,500, while that of kerosene increased from N100 per litre to N400 per litre.
The Nigeria Liquefied Natural Gas Limited (NLNG) said the high cost LPG was caused by shipping cost, delay of cargo discharges at receiving terminals in Lagos and because the commodity’s price is based on international price index.
Its General Manager, External Relations, Kudo Eresia-Eke, said Nigeria LNG’s domestic LPG price is based on an international price index plus 50 per cent of the shipping cost of delivering the product to receiving facilities in Apapa-Lagos. That price is invoiced in naira at the prevailing official interbank exchange rates.
He said the reality of this is that though LPG is produced and consumed locally, the product, like crude oil is an internationally traded commodity with an international price benchmark, open to global demand and supply pressures. NLNG, however, softens the impact of price variations by continuing to subsidise the cost of transporting about 40 per cent of total domestic market share supplied from Bonny Island, he added.
“Recent delays to vessel discharges at the receiving facilities in Apapa, Lagos, which are multi-use terminals with berthing priority accorded to vessels discharging other oil products such as petrol, kerosene and diesel, have also led to a temporary supply disruption over the last two-three weeks.
“ For instance, NLNG’s dedicated LPG vessel has been unable to discharge LPG at the Apapa port since December 29, 2016 due to jetty unavailability, resulting in temporary product shortages in the market.
“Additionally, NLNG continues to work with stakeholders, including offtakers and terminal operators, to eliminate bottlenecks and improve operational efficiencies to ensure product availability and help correct market price distortions. We are also engaged with other public and private stakeholders along the domestic market value chain to stimulate price stability and growth.
“NLNG remains fully committed to the goals of ensuring LPG supply availability, reliability and affordability, which are key for the development and growth of the domestic LPG market. It is in this regard that the NLNG Board recently approved an increase in the LPG dedicated for supply into the domestic market from 250,000 metric tons to 350,000 metric tons annually,” Eresia-Eke said.
Sadly, the scarcity may linger for a long time, as firms selling the products at various ends of the market are said to have ran out of stock.
The Chief Executive Officer, Nigeria Association of Liquefied Petroleum Gas Marketers (NALPGAM), Mr. Bassey Essien, attributed the price increase to shortage. He noted that the situation would improve when more vessels bring the product from NLNG headquarters in Bonny, Rivers State to Lagos.
He explained that a vessel carrying LPG comes to Lagos from Bonny every two weeks, and that the time lag between each delivery of the product and the others often result in short-supply of the product in the market.
For Comrade Umudu, the scarcity was caused by some cabals who hijacked the operations of the sub-sector. According to him, the cabals determine its supply and price.
He also told The Nation that LPGAR, which is an arm of the National Union of Petroleum Employees and Natural Gas (NUPENG), has continued to decry the instability in the supply of gas across the country caused by the cabal. He traced the crisis in the sub-sector to last July when the cabals hijacked the sub-sector.
IPMAN blames forex
scarcity, partial deregulation
IPMAN blamed the scarcity of kerosene across the country on the Central Bank of Nigeria (CBN) foreign exchange (forex) policy, and the partial deregulation of the sale of the product.
Its Vice President, Alhaji Abubakar Dankigari, said many marketers were unable to import kerosene because of forex scarcity. “Besides, kerosene is not fully deregulated; it is not like automotive gas oil (AGO) or diesel. Kerosene and petrol are not fully deregulated,” he added.
The NNPC said kerosene scarcity exists because it is the sole importing the product into the country. “The Corporation has been importing kerosene, supplementing this with local production. It operates in the downstream like other players,” its spokesman, Ndu Ughamadu, said.
He pointed out that if other marketers that have been authorised to bring in kerosene had lived up to expectation, there would not have been any scarcity of the product. Ughamadu said it was not the responsibility of the NNPC to find out why marketers are not importing the product since it is not the sole regulator of the industry.
“NNPC is a player in the downstream. We also have our retail outlets for the generic purpose of the nation. We sell to consumers and we have a conglomerate of players. We have IPMAN and others. But the question is: Are they bringing in products like NNPC? If they have all been bringing in products, there wouldn’t have been this kind of problem because the NNPC is also set up as a commercial entity,” Ughamadu said.
Environmental hazards loom
Experts have warned that if the scarcity of cooking gas and kerosene continues, there could be environmental hazards in the country.
An environmentalist, Mr. Ako Amadi, noted that because of the scarcity of gas and kerosene and the attendant price hike, many people have resorted to the use of firewood diregarding its effects on the environment.
“There would be deforestation, which simply means cutting down of trees in the forest. When this happens, people would be exposed to ecological problems such as depletion of the ozone layers,” Amadi warned
The environmentalist, who is also a consultant to the Canadian government on environment, warned that further depletion of the ozone layer and its attendant emission of poisonous materials is hazardous to human health.
Local refineries to the rescue
The Federal Government said it is making efforts to address the scarcity. The NNPC, in a statement, said the three refineries in Kaduna, Port Harcourt and Warri have resumed production of diesel and kerosene.
The state-run oil firm said the refining of diesel and kerosene is expected to balance the disequilibrium in demand and supply of the products in order to address the perennial scarcity of the products being experienced in recent times in parts of the country.
The Managing Director, Warri Refining and Petrochemical Company (WRPC), Solomon Ladenegan, said the plant had been doing well since the Crude Distillation Unit (CDU) was revved up on January 7.
Despite the assurances, close industry watchers have continued to heap the blame for the crisis in that segment of the oil and gas industry on governments. To them, successive administrations have failed to put the operations of that sector on the path of efficient service delivery.
Their consensus is that until this is done, the perennial scarcity of the products will continue.
cause the refinery has started working”, Yahaya stated.