Gas consumers in Nigeria are bracing for tougher times ahead, as marketers have hinted at an impending increase in liquefied petroleum gas (LPG) prices starting next week.
The President of the Nigerian Association of Liquefied Petroleum Gas Marketers, Olatubosun Oladapo, cited a range of factors contributing to the anticipated price hikes, including rising international gas prices, high tax rates, vessel costs, foreign exchange scarcity, and naira devaluation.
Mr. Oladapo expressed concern over the increasing international gas prices and highlighted the significant rise in vessel costs.
He also pointed out that the purchasing power of consumers has decreased, making it difficult for them to afford the higher prices.
Many consumers are reportedly resorting to traditional cooking methods such as firewood, charcoal, and sawdust due to the affordability challenge.
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“The situation is very unfortunate because prices are going higher. Nigerian consumers are passing through very difficult times because they can no longer afford gas,” Mr. Oladapo emphasized.
The gas market is further strained by high local taxes, worsening the challenges faced by both consumers and retailers.
Mr. Oladapo urged the government to reconsider its approach to taxation, suggesting that taxing profit instead of products would be more beneficial for the industry and consumers.
One of the key factors contributing to the impending price hikes is the scarcity of vessels in the international market.
As the demand for heating fuel is expected to peak during the upcoming dry season, charter rates for vessels have surged significantly.
According to data from Spark Commodities quoted by Bloomberg, charter rates reached $284,750 per day for November and $206,750 per day for October, marking a quadruple increase from the previous rate of $70,500 per day.
The Nigerian Liquefied Natural Gas (NLNG) Contract prices serve as the international benchmark for LPG prices, and global market dynamics influenced these prices.
Fluctuations in the exchange rate of the Nigerian naira against the US dollar also affect the domestic price of LPG.
The recent devaluation of the naira has further contributed to the price increase.
The Central Bank of Nigeria recorded at N749.62 the local currency’s exchange rate against the US dollar.
Mr. Oladapo, however, called on the government to consider providing palliatives, reducing taxes and levies, and exploring measures that would ensure the affordability of gas for the masses.
