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Gas marketers offer hope of price fall�Retail prices still N1,800 per cyclinder
Ayo Olesin
Marketers of liquefied petroleum gas or cooking gas have welcomed the latest moves to boost supply to the domestic market and precipitate a significant reduction in retail prices.
Unexpected delays in the modification of ExxonMobil Bonny export terminal gas offloading facilities had stalled the expected supply boost in the liquefied petroleum gas market, but one of the three firms contracted to lift LPG from the terminal said it had hired a large vessel capable of lifting from Bonny and discharging to port at Lagos.
Oil firm, Owels and Nigerian National Petroleum Corporation subsidiary, Hyson, also got the lifting contracts, two months ago.
However, the offloading platform is presently too high for the small LPG vessels that will deliver supplies to port at Calabar and Lagos and required modifications, expected to cost about $1 million, which the Federal government agreed to finance initially.
However, the contractors were not ready to wait for government, and moved to provide a vessel that could match ExxonMobil requirements, to begin implementation.
Retail prices however remained unchanged in Lagos as at Wednesday, ranging from N1,800 to N2,000 per 12.5 kilogramme refill.
Chairman of the National Association of Liquefied Petroleum Gas Marketers, Alhaji Aluwalu Ilu told our correspondent that the bulk prices remained N1.950 million per 20,000 tonne truck.
�The prices are yet to come down, because we have not received the supplies yet. The situation will be clearer by Friday, he said.
He, however, said that the delivery of the first load of 7,000 metric tonnes would have an impact on the market.
The Federal Government, about two months ago, reached an agreement with the oil major to supply the domestic market with 300,000 metric tonnes of LPG per year, under a special initiative to boost domestic gas utilisation.
The initiative followed a World Bank recommendation that the domestic LPG market should be rapidly developed to ensure increased gas utilisation as part of steps to reduce greenhouse gas emissions from flaring and use of alternative hydrocarbons like kerosene for cooking.
The World Bank was also concerned about forest depletion and desertification in Nigeria due to the use of fuel wood.
Exxon Mobil, which presently exports gas from its Bonny terminal agreed to supply the quantities required, which is six times the present domestic consumption of about 55,000 MT per annum. LPG marketers had had to rely on expensive imports to feed the market, which shrunk from 120,000 metric tonnes in 1992.
Marketers had complained that despite the government�s plans to increase gas utilisation, they were still burdened by import duties and charges that amount to about 42 per cent of landed cost, which has only kept potential customers away.
In India, a five-kilogramme refill cost just $1 or N130. Even in nearby Cotonu, gas is widely used by roadside food vendors, while gas consumption in Senegal, with a population that is less than 10 per cent of the Nigerian population consumes 120,000 metric tonnes of LPG annually.
Some of the problems militating against LPG usage according to marketers include relatively high cost of gas equipment including stoves and bottles, public perception that LPG use was dangerous and high prices due to scarcity.
They hinge much of the market development efforts on increased supplies, while stakeholders are also planning the establishment of a special fund that will allow for lower cost of entry into the market for users.
Essentially, the fund will by used to subsidise cost of purchase and maintenance of gas bottles, which would now be built into retail prices for recovery.
The Punch, Thursday July 08, 2004
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