DPR Says LPG Importation Will Erode Nigeria’s Gas Master Plan

Local content: DPR counsels Nigerians to invest in oil and gas production –  Department of Petroleum Resources

Yemisi Izuora

The Department of Petroleum Resources, DPR, has cautioned that granting import license for Liquified Petroleum Gas, LPG, also called Cooking Gas, will grind down anticipate growth in the gas sector.

Director of the DPR, Sariki Auwalu, said Nigeria has abundant and sweet gas waiting to be explored and the policy direction of the Minister of State for Petroleum Resources, Timipre Sylva, on gas is expected to attract humongous investment that will help in transforming the economy.

Auwalu, said said today Nigeria produces about 8 billion standard cubic feet of gas daily, exporting 3.5 billion standard cubic feet of gas and domestic utilisation now standing at 2,8 billion standard cubic feet of gas daily, and that what is needed to do at this point is to drive policy to mature the domestic gas market.

Speaking on Tuesday while reviewing implementation of the Nigerian gas transportation network code (NGTNC), launched last year, the Director said some potential investors are targeting investment in the domestic gas value chain.

He said that the Master-Plan  is a guide for the commercial exploitation and management of Nigeria’s gas sector and aims at growing the Nigerian economy with gas by pursuing three key strategies to stimulate the multiplier effect of gas in the domestic economy, position Nigeria competitively in high value export markets and guarantee the long term energy security of Nigeria.

Meanwhile, Oriental News Nigeria finding shows that those using cooking gas are in for a hard time as the price of the product keep going up without any idea of when it would come down.

It is gradually going out of the reach of low income earners as they could no longer bear the burden of the price of the commodity.

On Monday, the price of the commodity jumped to N7.6million from about N3.6 million-N4million per 10 metric ton last year.  But from the beginning of this year the price started increasing.

1000 kilogram is equivalent to 1 metric ton, and the ex-depot price of 1 kilogram is put at N380.

In the last one month the price increased from N7million to 7.2m and then 7.3million and on Monday it jumped by N400,000 to N7.6million.

This is the amount the commodity is taken from the depots to the plants where it is refilled into the 12.5kg cylinders.

The price of 12.5kg is about N6000 on the average at retail outfits in some parts of Lagos plants.

The situation has been attributed to lack of foreign exchange to import gas into the country. The in county capacity for the companies producing LPG are just about 60 percent while the remaining 40 per cent is imported.

The situation is being compounded with the introduction of Value Added Tax on the commodity.

The Nigeria Liquefied Natural Gas, the most reliable source in- country export most of the one its producing as it was initially not to address domestic needs of the country.

The 12.5 kg that was selling for N3,500 has also jumped to N6000 while 3kg that was sold for N900 before has now jumped to about N2,500 and 6kg is being sold for about N4000 depending on the area where it is being sold.

Government policies on Foreign Exchange which has made it difficult to be accessed by importers of cooking gas or  LPG, Nigeria’s exchange rate which has plummeted, different levies introduced by the government, such as Petroleum Products Pricing Regulatory Agency’s(PPPRA)  Admin Charge on LPG; various Department of Petroleum Resources (DPR) charges, and the recently introduced Value Added Tax (VAT) which is to be implemented by the Nigeria  Customs  Service on imported LPG which payment has been backdated, are big hurdles that  are already in motion to castrate the initiative which is already gaining grounds across the country.

Dayo Adesina, Special Adviser to the President on LPG, he said the government was going to look at the situation.

“The Federal Government is doing something about the issue so as not allow it efforts to waste because of high price of the commodity.”

“The government is working assiduously to look for additional sources of LPG in the country to reduce the foreign exchange component of the price.

On the issue of introduction of VAT which Nigeria Customs Service backdated its payments, he said, that was just brought to the attention of the government then and that it would address it appropriately.

“We are not self sufficient and had to import to augment the supplies from Nigeria Liquefied Natural Gas Limited through import that is why it is affected by Foreign Exchange. I am sure when we are able to find additional sources and there is competition, the price would come down. The NLNG was only able to provide 450,000 tons last year and the consumption of the country has hit over 1 million metric ton per annum. We are not happy that the price of the product has increased,” he said.

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