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NLNG bemoans low absorbing capacity of domestic LPG market

By on November 26, 2014

The Nigeria Liquefied Natural Gas (NLNG) Limited has said that the absence of a functioning cylinder manufacturing plant, inadequate storage facilities, poor transportation network and infrastructure, as well as limited jetty availability and the low priority accorded to berthing of Liquefied Petroleum Gas (LPG) vessels have all contributed to the domestic market’s inability to absorb its increased LPG supply to the domestic market.

NLNG also listed the other impediments to the growth of the domestic LPG market, which could require urgent intervention of stakeholders to include terminal operation and development, distribution and retail, promotion and awareness as well as government policy and incentives for full maturity of the domestic LPG market.

While affirming his company’s commitment to providing the Nigerian domestic market with sufficient volume of LPG, also known as cooking gas, from its six- train facility at Bonny, Rivers State, the Managing Director of NLNG, Mr. Babs Omotowa advocated for increased investment across the value chain to enable sustained and reliable product availability.

Omotowa, who was represented at a recent LPG conference in Abuja by the company’s Marketing and Development Manager, Mr. Abdulkadir Ahmed noted that NLNG, which currently supply some 80 per cent of the total cooking gas consumed by Nigerians, has also subsidised the product to the cost of about $50 million, since the government-induced supply intervention in the domestic commenced.

In a presentation titled: “NLNG’s Role in Developing the Domestic LPG Market”  Omotowa said the company had considerably increased its volume of supply to the domestic market but that the domestic market would be unable to take more volume from it due to the extant market challenges.

“NLNG’s intervention in the domestic LPG market began in 2007 with the dedication of some150, 000 metric tonnes of cooking gas annually, in response to an acute shortage of the product in the market at the time. Only last year, the company further increased this volume by 66 per cent to 250,000 metric tonnes in readiness to meet growing utilisation of cooking gas by Nigerians,” he said.
He further said that only about 600,000 metric tonnes of cooking gas have been absorbed by the local market since NLNG’s intervention in September 2007 because of market inefficiencies across the LPG value chain.

The inefficiencies he said include: “The absence of a functioning cylinder manufacturing plant, inadequate storage, poor transportation network and infrastructure, as well as limited jetty availability and low-priority berthing accorded to Liquefied Petroleum Gas (LPG) vessels.”

Similarly, President of the Nigerian LPG Association, Mr. Dayo Adeshina, pointed out that due to Nigeria LNG’s intervention, the domestic LPG is not where it was when it came on the scene in September 2007.

“NLNG has been at the forefront of stabilising supply which has brought some obvious gains, including an almost seventy percent reduction in price from between N6,500 and N7,500 for a 12.5kg cylinder to its current price of between N2,800 and N3,500. But other stakeholders still have some way to go for the public to fully enjoy the gains of this intervention,” he said.

 

[ThisDay]