High import, VAT, FX Scarcity Worsen Rising Cooking Gas Cost 

Marketers warn that price of 12.5kg cooking gas could increase to N10, 000  by December – Nairametrics

Oladimeji Ganiyu

More reasons have emerged on the reasons why the rising cost of cooking gas may not crash soon, Chief Executive Officer of Ecogas Energy Resources Limited, Chief Shina Luwoye has said.

Luwoye at an interactive session with media in Lagos yesterday, said that the importation of about sixty per cent of cooking gas consumed in the country remained a major factor for the skyrocketing prices

He equally added that the 60 per cent import volume is further  worsened by the re- introduction of 7.5 per cent Value Added Tax (VAT) on cooking gas, devaluation of Naira as well as scarcity of dollar inflow were responsible for the surge in the prices of the product.

Expressing concern over the high price, Luwoye maintained that Ecogas has steadily pursued LPG adoption and penetration within the localities of her gas refilling plants and has aggressively pursued cost and margin cutting measures aimed at making the product more available and affordable in its catchment areas. The company currently serves up to 500, 000 families on monthly basis.

“The Federal Government’s efforts to deepen adoption of LPG have been yielding results. We can boldly see this through the high demand for the product. Even my aged mother who hitherto forbids her tenants from using cooking gas now uses LPG for cooking. The gains we have recorded, which now make more people to demand for gas shows that we have done well as a country in terms of gas. Unfortunately, the recent uncontrollable north pole movement in LPG market price curve is a major threat to the domestic LPG market.

“What we are now experiencing with gas also has elements of general price increase / inflation in Nigeria that is affecting the nation in general and other petroleum products. And, because just 40 per cent of demand for LPG is being supplied locally while 60 per cent is sourced through importation, a lot of other external factors have come to affect the price. Chief among these is the 7.5 Value Added Tax (VAT).

“The NPSC LPG terminal at Apapa had played salutary roles in bringing down the price of LPG for many years. This critical facility with 8000MT capacity had been unproductive for over 6 months because of a protracted maintenance, that could have taken private sector to carry out in less than 30 days.

“Apart from losing over half a Billion Naira revenue, the unavailability of the facility has marginally contributed to the price increase.

“The devaluation of Naira is another cause of the cooking gas price surge, forex (foreign exchange) is another. The amount of dollar inflows is far less than outflow and this shortage has become a serious issue for importers of the LPG who need dollars to effect their importations,” the helmsman for Ecogas Energy Resources Limited declared.

Debunking insinuations that marketers of cooking gas are profiteering, Luwoye maintained that on the contrary the businesses of the marketers and off-takers are at risk.

“The operators are now complaining bitterly because of the situation on ground and its effects on patronage. And, if the price goes beyond the reach of the consumers, they will definitely look for alternatives. We have observed this dangerous trend at Ecogas and that is why we have kept looking out for ways to keep making gas available and affordable for people in our catchment areas.

“Asides this, we have noticed that the information that the people have about safety and handling of cylinders is poor and we are doing a lot in this regards too. The people are not aware that this cylinder has expiry dates, they area also not aware that other adjoining materials to cylinders like hose, clips and others, have life spans too.

“Asides our plan to deepen our market share in the entire Southwest states from serving 500, 000 daily to 3 million people, we have continued to sensitise the populace about the need for them to be aware of the expiry dates and life spans of cylinders, hose, clips and other materials. To us, we see this and other services as something key not only to the existence of Ecogas as a business but also to humanity.

“We do not only educate and inform our customers about safety, we also test the integrity of all cylinders brought to our plants before we dispense product. There are times we turned customers down, we refused to fill the cylinders when we discover leaks or any threat to the integrity of ‘the cylinders,” Luwoye said.

He blamed the gas explosion, which recently rocked Abeokuta on what he called; mishandling or illegal mixing of gas, a situation he said, has nothing to do with LPG supply in the Ogun state capital.

“The government is doing its best and we are sure the government cannot do everything alone. At Ecogas Energy, we make sure that we do all within our power to lessen burden this LPG price surge must have caused the people. Unfortunately, we too cannot do everything, other businesses too should play their roles, and when this is done life becomes better for everyone,” he said.

“On our part at Ecogas Energy Resources Limited,” he continued, “We are dedicated to administering products and services that lead the industry with safety and the environment in mind while operating our business for the benefit and well-being of our employees, customers, the general public, and the countries where we work. On our turnkey projects, we undertake the design, fabrication, importation and installation of all sizes of LPG tanks in Nigeria. We build gas plants of various capacities.

“The company is also a leader in LPG retailing and bulk supply. We sell LPG at a competitive price to individuals and industrial customers through our plants in various locations in Nigeria. We sell LPG tanks and accessories at moderate and affordable prices. Our foreign and local tanks and accessories are certified by SON, DPR,” .

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