The Manufacturers Association of Nigeria, MAN, has called for strategic partnership with stakeholders to resolve the lingering supply hiccups often seen in the Liquified Petroleum Gas, LPG, also called cooking gas distribution.
To sustain distribution and close supply gap, the Association suggests that the Nigerian Liquefied Petroleum Gas Association (NLPGA) should liaise with the Central Bank of Nigeria (CBN) to ensure disbursement of loan facilities from special gas fund (National Gas Expansion Programme Framework) to competent investors in the LPG value chain.
This MAN said would not only boost production, sustain supply to the domestic market and increase utilisation, but also, substantially increase LPG in the next 15 years.
The Director-General of MAN, Segun Ajayi-Kadir, speaking in Lagos, said the LPG production level in the country was far below growing market demand.
According to him, the LPG market is still un-tapped, with the operators needing substantial intervention funds from the apex bank to achieve prompt supply of LPG to the domestic market and increased usage.
“It is estimated that once the market is developed, it is expected to contribute considerably to our economy. “The forecast of LPG demand is estimated to substantially increase in the next 15 years. There is, therefore, a need to put in place reliable and efficient production and supply system, financial and fiscal policies that will guarantee the attainment of the expected demand.
This association (NLPGA) should liaise with CBN to ensure disbursement of loan facilities from special gas fund (NGEPF) to competent investors in the LPG value chain.”
He further stated that LPG (cooking gas) is a fuel gas, which is produced from petroleum refining of crude oil and extraction from natural gas. It is used for heating purposes, production of aerosol propellant, input to petrochemical industry and as a refrigerant.
He added that LPG is a convenient, portable energy source that is easy to transport and store. LPG is adjudged by some to be the most clean, versatile and environmentally friendly fuel.
Speaking on the historical perspective of LPG in the country, Ajayi-Kadir said: “In the last 20 years, LPG consumption in Nigeria was the lowest in West African sub region. The dormant state of the refineries resulted in low LPG supply; alternative energy sources such as kerosene, inadequate infrastructure, logistics and lack of sensitisation were all contributory to the low consumption. “However, in 2003, Nigeria was producing large quantities of LPG from producers and this quantity was exported while domestic consumption came mostly from import. “On one hand we are producing and on the other hand we import for domestic market. As a result of this sorry state, the Federal Government set up a Presidential Steering Committee on LPG (under the chairmanship of the Special Assistant to the President on Petroleum Matters), which carried out studies in conjunction with the World Bank.”
According to him, before the Committee was set up, a. The domestic supply of LPG depended mostly on the refineries which were in turn operating at very low-capacity utilisation. b. Export production of LPG was substantial but nothing was reserved for domestic market due to inability to accommodate small vessels at loading terminals at NLNG and other export points. c. This led to importation to bridge the gap. d. Furthermore, the supply of the imported LPG for domestic market became a serious challenge due to logistic constraints at receiving terminals. e. There was weak legal safety framework.
The industrialist said in 2004, government, through the Committee took conscious and deliberate positive actions and policy framework to change the existing conditions.
•Government directed LPG producers to accommodate lighter vessels to supply the domestic market; The defunct Directorate of Petroleum Resources (DPR) was mandated to provide regulatory framework and a sensitisation program was embarked upon; •Government facilitated the entry of new customers into the LPG domestic market; •This Association (NLPGA) was reorganised, recognised and encouraged to participate fully in opening up and developing the LPG market; •Government carried further actions to boost all activities in the LPG value chain: i. Government waived import duties on LPG and equipment related to it, ii. In 2008, introduced the Nigerian Gas Master Plan aimed at achieving full blown domestic market, adequate infrastructure blueprint and domestic gas supply obligations. iii. In 2016, Government introduced the Nigerian Gas Flare Commercialisation Program (NGFCP) aimed at regulating gas flaring in the country with attendant LPG production. The program is now re-launched by Nigerian Upstream Petroleum Regulatory Council (NUPRC).
Also, he said In 2017, Government introduced the National Gas policy aimed at ensuring supply of gas to power sector and production of various forms of gas products. V. In 2020, the Nigerian Gas Transportation Network Code was introduced to promote further development of gas. vi. In 2021, Government enacted the Petroleum Industry Bill (PIB). It provides for developing adequate infrastructure, ensuring sufficient funding, providing enabling commercial and fiscal terms and ensuring a conducive business environment. According to him, these government interventions opened up and broadened the LPG domestic market that witnessed transformation from 2004 to date.
According to him , “In summary, the effect of the intervention resulted in the producers (notably NLNG). dedicating certain quantity of LPG for domestic market, accommodate smaller vessels into jetties, increased new entrants into the domestic LPG market, leading to an increase in retail outlets, increase in coastal storage facilities and logistics fleet. There was also an increase in awareness and benefits of using LPG over competing fuels. “These factors greatly increased LPG consumption with population growth and urbanization of cities also boosting consumption. Over the period of 15years, LPG consumption moved from less than 60,000 metric tons per annum to above 1,300,000 metric tons per annum (MTPA).”
While touching the production of LPG, the technocrat noted, “The production of LPG is mainly from two sources. Extraction from natural gas and refining of crude oil. Nigeria LNG is presently the main producer/supplier of LPG from natural gas processing while the second source contributes zero due to non-functional refineries. Development of natural gas processing plants, which could have provided large volumes of LPG was insignificant despite huge proven natural gas reserves of about 200Trillion Cubic Feet (TCF). Thankfully a few have been commissioned in the last couple of years with more underway.”