Why price of cooking gas may not crash despite improved supply

Why price of cooking gas may not crash despite improved supply

While news of improved supply in cooking gas holds some relief for Nigerian households, there are concerns that the price of this essential item may not crash anytime soon.

Over the weekend, Ripples Nigeria gathered that the Nigerian Liquefied Natural Gas (NLNG) Company had delivered about 13000 tonnes of LPG to its Lagos jetty.
This is said to have been confirmed by its General Manager, External Relations, Kudo Eresia Eke who also added that there would be return trips by its vessels to ensure adequate supply and price stability.

The development not withstanding, consumers may have to contend with high cost for cooking gas as domestic prices are said to reflect international price index plus 50 per cent of the shipping cost of delivering the product to receiving facilities. Also worrisome is the fact that the unstable and diminishing value of the Naira will continue to negatively impact prices as the product is invoiced in naira at the prevailing official interbank exchange rates.

Market watchers argue that these factors will remain a major setback in the struggle to ensure that prices of domestic gas are affordable while deepening its usage across most Nigerian homes. Already fears of increasing damage to the environment had been expressed with both the ministries of environment and petroleum resources at loggerheads over cause of deforestation in the country.

Scarcity of domestic gas had seen prices rise to over N5,000 for the regular 12.5kg from an average of N3,200. Even with improved supplies, market watchers contend that prices may not likely go below N4,000 as international price index rules and the Naira remains weakened.

Worse still, guarantees of efficient stock levels are likely to remain a challenge as the NLNG blames port handling issues as set back for its operations. Said its spokes person, “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.” This scenario may continue to play out as priority is placed on discharge of petrol and aviation fuel.

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