AS the Federal Government’s quest for gas monetisation inches further, the Liquefied Petroleum Gas (LPG) sub-sector is consistently facing series of hurdles that remain the clog in the wheel of the laudable agenda.
The gas sub-sector is handicapped in the area of delivery and storage infrastructure, coupled with low usage of gas in the country, especially the rural areas.
According to reports, only one vessel, GAS DE PROVINCE, is available to shuttle between Bonny Island and Lagos to deliver LPG from NLNG to domestic markets. Even when the gas is delivered, inadequate jetty facilities have led to the situation whereby the vessel could not berth for several weeks, thus accumulating demurrage and creating tight supply situation in the market.
The NLNG had in 2007 dedicated 100,000 metric tonnes to the domestic market annually, but later increased the volume to 250,000 metric tonnes.
The Chief Executive Officer of Ultimate Gas Limited, Mr. Auwalu Ilu said recently that gas dealers prefer to import, rather than get supply from Bonny Island, “getting access to the jetty in Lagos is an issue and the management of the jetty is also an issue. It sounds strange that you have dedicated 250,000 metric tonnes, but you import more than the dedicated volumes. There is more import of gas than from NLNG today,” he said.
However, it has been noticed that there is a fall in price of domestic gas in the last few weeks.
The Manager, Honey Legon Nigeria Ltd Tunde Ajayi, a gas dealer in Lagos, told The Guardian that the price of gas had gone down.
“We use to sell the 12.5kg for N3,000, but now it is N2,500. 50 kg of gas now goes for N10,000 against the former price of N12,000. Gas is even supposed to be cheaper, but it is sold locally at the same rate of the international market. So the Federal Government halted gas export, and there is excess of gas now. Government wants everybody to use gas, they are working on making it affordable, but most Nigerians are ignorant, so the demand for gas is low. They think it is for the rich, and there is also the fear of houses getting burnt. Gas is deregulated, so it is what you buy that you sell. By next year, the price might come as low as N2,000 per 12kg.”
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Indeed, the operators in the sub-sector told The Guardian recently that Nigeria is still recorded as the lowest per capital LPG consumption in West Africa.
Nigeria is a net exporter of LPG in Africa, producing over two million tons per annum (MTPA), and consumes barely 15 percent of the volume locally.
According to reports, LPG is the least utilized of the four major cooking fuels – Firewood, Kerosene, Charcoal, Gas.
The nation is therefore facing increasing environmental challenges with continuous deforestation as over 50 percent of households still rely on firewood as cooking fuel.
The Manager – Marketing and Development, Nigeria LNG Limited, Abdul-Kadir K. Ahmed said the per capita consumption of LPG is just above one kg in Nigeria, which is comparatively less than other West African countries like Ghana (4.7kg) and Senegal (9kg) per capita (WLPGA).
Government could enhance the gas sector by drafting favourable regulation that would address the pricing challenges. It can draw up an LPG utilisation policy, and implement a phased removal of subsidy on kerosene
He lamented that inefficiencies in shipping operations has led to high unit freight cost, while channel draft restrictions (Calabar access), including maritime security are major impediments.
Besides, he noted that Jetty occupancy; availability and turnaround times are other factors that militate against smooth supply of the product as vessels incur high demurrage due to insufficient berthing space.
To receive the products, the operators face inadequate and unevenly spread receiving terminals. Only two operational terminals are in Lagos. Few jetties are available and they give low priority to LPG,” he said.
Ahmed also listed inefficient and unsafe operations; inadequate transportation infrastructure; inadequate secondary and bulk storage facilities (size/ spread) and few bottling plants; lack of standardisation and high start up switching cost, among others, as some of the factors working against even distribution of the commodity in the country.
The President, Nigeria Liquefied Petroleum Gas Association, Dayo Adesina, also confirmed that the industry is facing challenges due to limited jetties, especially in Lagos axis.
“The challenge we have is delay in loading because we have three terminals where NLNG discharges products in Lagos, NAVGAS, NIPCO and PPMC. It is only NAVGAS that has a dedicated jetty where vessels can berth and discharge immediately, but NIPCO and PPMC are multi-product terminals that also discharge the Premium Motor Spirit (PMS), Aviation Turbine Kerosene (ATK) and Dual Purpose Kerosene (DPK) among others, so they operate on routine basis and they give priority to PMS, especially at the period of scarcity. Because of this, LPG vessel are always delayed,”
The Managing Director, Chief Executive Officer, Kobitel Nigeria Limited, Kola Olabiyi, lamented the low consumption level, urging the Federal Government to introduce some incentives that would enable people to switch to cooking gas.
“The cost of acquiring gas cylinders and accessories are high and its believed that government should be able to do something about it, so that Nigerians can all enjoy the abundant gas resources and jointly promote clean environment,” he said.
Olabiyi, who operates around Ado/Badore, Ajah axis, said the market size in that area is below expectations, although it is improving. He urged government to take up the safety issue in LPG marketing and usage in order to curtail the incessant gas explosions around the country.
Data released by the Development Association for Renewable Energy on the Nigerian household energy mix showed that the higher percentage of the population still use firewood (56 percent), while 27 percent uses kerosene. Although the usage of other energy sources for cooking such as charcoal, electric, sawdust have reduced drastically to six percent, four percent, and two percent respectively, the usage of gas is still at a paltry five percent and indicates a sluggish growth in the utilisation of the natural resources that is abundantly available within the geographical province of this nation.
Research showed that 71 per cent of non-users are willing to spend up to N2000 per month on LPG. 89 per cent of the willing users do not have gas cylinder in their homes.
Experts believe that if issues of affordability, awareness, availability and safety are addressed, 69 percent of the non-users could turn to gas for cooking.
“Government could enhance the gas sector by drafting favourable regulation that would address the pricing challenges. It can draw up an LPG utilisation policy, and implement a phased removal of subsidy on kerosene.”
The Executive-Vice Chairman of Techno Oil Ltd., Mrs Nkechi Obi, said about 30 million Nigerian households that use kerosene and firewood face severe health hazards, hence the need for the government to look into the matter, to make the populace embrace cleaner sources of energy for cooking.
Meanwhile, Oando marketing has started the construction of $150m gas jetty in Apapa area of Lagos to complement the existing ones.
When completed, it would help to reduce the congestion and demurrage at existing facilities due to increased capacity.
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