The Crisis of Cooking Gas Scarcity in Nigeria
The scarcity of liquefied petroleum gas (LPG), commonly known as cooking gas, has become a pressing issue in Nigeria. In response to the growing concerns, the Minister of State for Petroleum Resources (Gas), Ekperikpe Ekpo, has taken a firm stance against marketers who are hoarding or exploiting consumers during this crisis.
This situation comes amid complaints from retailers regarding the disparity between the price offered by the Dangote refinery and the prices at which off-takers sell the commodity to the market. It is worth noting that Alhaji Aliko Dangote had previously threatened to distribute cooking gas himself if distributors failed to cooperate with him to reduce the price.
In an interview with our correspondent, Ayobami Olarinoye, Chairman of the Liquefied Petroleum Gas Retailers branch of the Nigeria Union of Petroleum and Natural Gas Workers, highlighted the pricing discrepancies. He stated that the Dangote refinery sold LPG at N15.8m per 20,000 metric tonnes to off-takers and major distributors, who then resold the same volume between N18.4m and N18.5m to retailers.
Sources at the Dangote refinery confirmed that marketers purchase LPG at N715,000/MT, with some sources indicating a range from N715,000/MT to N790,000/MT. Given that one metric tonne contains 1,000 kg, this means that marketers buy LPG at approximately N715/kg from the refinery.
According to the refinery sources, they do not control the retail price. As per regulations set by the Petroleum Industry Act (PIA) and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), only the government can fix prices. Therefore, if marketers sell LPG at N2,000/kg after purchasing it at N715/kg, there is little the refinery can do to intervene.
The PUNCH recalls that the prices of cooking gas recently increased from an average of N1,000 per kilogramme to about N2,000/kg in some locations. This followed the recent strike by the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) during the rift between it and the Dangote refinery.
Almost two weeks after the strike was suspended, the prices of cooking gas refused to decrease, and the scarcity deepened. Expressing concern over the development, the gas minister appealed for calm and understanding from Nigerians, assuring them that the situation was temporary and would normalize by next week.
According to the minister, the sharp increase in price was caused by two main factors: the industrial action by PENGASSAN at the Dangote refinery and the ongoing maintenance activities at the Nigeria LNG Train 4 facility. The strike temporarily halted LPG loading at the Dangote refinery, while the maintenance work at NLNG reduced the volume of gas available in the domestic market. These disruptions led to a shortfall in supply and a consequent rise in prices due to a demand–supply imbalance.
Ekpo noted that the situation was improving as operations had resumed at the Dangote refinery, with LPG loading to the domestic market already underway. Additionally, the Bonny River Terminal operated by Seplat Energy had commenced loading, and NLNG was gradually restoring normal operations as its maintenance neared completion. With these developments, supply to the domestic market is expected to stabilize by next week, leading to a gradual reduction in prices.
Addressing Market Practices and Supply Challenges
The minister reiterated that the LPG market remained deregulated and urged marketers, distributors, and other stakeholders along the gas value chain to be patriotic in their dealings. He appealed to them to desist from hoarding and refrain from exploiting consumers for profit.
To ensure compliance, the minister has mandated the Nigerian Midstream and Downstream Petroleum Regulatory Authority to intensify monitoring of LPG depots across the country to prevent product hoarding and other sharp practices capable of worsening the current situation.
Olarinoye expressed concern that the problem lies in inadequate supply rather than hoarding. He argued that no retailer has the capacity to hoard gas, given the limited storage capacity allowed due to safety concerns. He also emphasized the need for the government to address why major marketers are not patronizing NLNG as they used to before the Dangote refinery entered the market.
Olarinoye suggested that the government should find out why off-takers and majors are no longer off-taking products from NLNG to complement Dangote. He believed that if NLNG could sell at a slightly different price than Dangote, it might encourage off-takers to continue sourcing from them.
Furthermore, he urged the Federal Government to genuinely moderate the crisis between Dangote and the labor unions to facilitate smooth and consistent production and distribution of LPG. In the long run, the government should ensure that other private players with refinery licenses fast-track their processes so that the nation does not rely on a single source. There is a need to license more players and ensure they commence construction.
Olarinoye also advised the Bola Tinubu administration to address the issues behind the four comatose Nigeria-owned refineries.
Earlier, the Nigerian Association of Liquefied Petroleum Gas Marketers (NALPGAM) had alleged that retailers were to blame for the recent surge in cooking gas prices. NALPGAM’s National President, Oladapo Olatunbosun, attributed the price hike to gas retailers. However, LPG retailers disagreed, describing Olatunbosun’s comments as “unfair and misguided.”
As of Monday, Nigerians reported that cooking gas was still priced at around N2,000/kg in places like Lagos and Ogun, with some reporting minor cuts in prices. Despite this, many gas retailers have yet to restock, raising concerns that some may revert to using firewood and charcoal for cooking.
The gas minister assured that normalcy would be restored by next week.
