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NLNG’s subsidy on cooking gas hits $50m

By on November 28, 2014

The Nigeria Liquefied Natural Gas Limited has subsidised Liquefied Petroleum Gas (cooking gas) to the tune of $50m since the commencement of its intervention scheme on the product nationally.

The firm, which currently supplies some 80 per cent of the total cooking gas consumed by Nigerians, restated that it remained committed to increasing domestic cooking gas supply to the Nigerian market.

It also affirmed its commitment to providing the nation with sufficient volumes of LPG based on production operations from its six train facility at Bonny, Rivers State.

The Chief Executive Officer of the company, Mr. Babs Omotowa, at the Nigerian Liquefied Petroleum Gas Association conference in Abuja, advocated increased investment across the value chain to enable sustained and reliable product availability.

“NLNG which currently supplies some 80 per cent of the total cooking gas consumed by Nigerians, has also subsidised the product to the cost of about $50m since the intervention began,” he said.

The NLNG boss added, “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 to meet growing utilisation of cooking gas by Nigerians.”

Omotowa, in a presentation titled: NLNG’s Role in Developing the Domestic LPG Market delivered by Nigeria LNG’s Marketing and Development Manager, Mr. Abdulkadir Ahmed, stated that only about 600,000 metric tonnes of cooking gas had been absorbed by the local market since NLNG’s intervention in September 2007 because of market inefficiencies across the LPG value chain.

These, he added, included the absence of a functioning cylinder manufacturing plant, inadequate storage, poor transport network and infrastructure, limited jetty availability and low-priority berthing given to LPG vessels , which have all conspired to thwart the market’s ability to absorb NLNG’s increased supply.

Other critical areas of possible intervention as highlighted by the NLNG CEO include terminal operation and development, distribution and retail, promotion and awareness and government policy and incentives for full maturity of the domestic LPG market.

Also speaking at the conference, the President, Nigerian LPG Association, Mr. Dayo Adeshina, explained 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 70 per cent 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.”

NLNG is owned by four shareholders, namely, the Federal Government of Nigeria, represented by the Nigerian National Petroleum Corporation, (49 per cent); Shell Gas BV, (25.6 per cent); Total LNG Nigeria Limited (15 per cent); and Eni International, (10.4 per cent).

Mid November this year, most LPG plants in the country were said to have run out of product supply, which caused serious panic among stakeholders.

This supply challenge, our correspondent gathered, was heightened by the fact that the concerned authorities had not been able to provide a space for the berthing of LPG vessel from Nigeria Liquefied Natural Gas which was in the Apapa shore.

The vessel is said to have been waiting for space to berth for more than a week, our correspondent learnt.

Speaking on the development, the National President of Liquefied Petroleum Gas Retailers Association of Nigeria, Mr. Michael Umudu, said, “There is a serious problem in the supply of LPG currently. In fact, as of today, most LPG plants in the country have run out of supply owing to the inability of the concerned authorities to provide a space for the berthing of LPG vessel from NLNG which is in the Apapa shore.

“As you may have known, refineries are not producing. The vessel is said to have been waiting for space to berth for some time now, perhaps about two weeks. It appears that the only source of supply now is Navgas which seems to be importing the product and this can never be enough.

“This kind of situation has become a regular occurrence in the recent times.”

Umudu said stakeholders in the LPG market had experienced similar shortage in September this year, while explaining that as the situation appeared to be getting normal, recent developments had made it to resurface again.

“It is quite unfortunate that up till now the policymakers (both at federal and state levels) are yet to come out with a robust programme to develop the industry. One of the major implications of this kind of erratic supply is proliferation of malpractices including production or importation of substandard LPG,” the LPGARAN boss lamented.

 

[Punch]