FG should build LPG-dedicated jetty —NALPGAM Executive Secretary

Scarcity of Liquefied Petroleum Gas (LPG) otherwise called cooking gas has been rocking the country since last quarter of 2016. In this interview with OLATUNDE DODONDAWA, the Executive Secretary, National Association of Liquefied Petroleum Gas Marketers (NALPGAM), Mr Bassey Essien, stated the challenges of discharging LPG at products jetty where priority is always given to premium motor spirit (PMS) and Aviation fuel. Excerpts.

Can you give an overview of the LPG market in Nigeria?

There has been a remarkable improvement in consumption of LPG, though still very far from the targeted expectation. Many years back when cooking gas was mostly sold by the major oil marketers through their outlets in the filling stations, cooking gas usage was like a status symbol comparable to ownership of Nitel telephone lines then.

The entrance of Nigeria LNG (NLNG) into the industry and the concerted effort of government particularly beginning with former President Obasanjo who mandated NLNG to deliver through the domestic supply scheme a dedicated amount of cooking gas, coupled with the awareness that has been created over time on the benefit and convenience of usage of LPG, there has been an increase in household who now use LPG as a cooking energy.

From as low as 70,000 metric tonnes (MT) consumption pre-2007, to over 350,000MT annual consumption in 2016, one would say the market is expanding. But looking at the position of Nigeria as the second largest producer of LPG in Africa with a per capital consumption of 1kg compared to countries like Ghana, Senegal and Egypt who have higher consumption, our size has yet to impact on LPG consumption. With the recent government deregulation on kerosene, all parameters being equal, we expect massive improvement in LPG usage,

However, it can be better because government is making positive inroads in the industry going by steps taken towards the end of last year in redrafting a new Oil and Gas policy and also convening  the Nigerian LPG Stakeholders’ workshop on Domestic LPG Expansion Initiative, all these are pointers towards increasing the consumption and utilization of LPG. There is a huge awareness and increase in LPG usage now.

What are the challenges confronting the LPG market?

There are several factors and all are interwoven. Obviously, there is the issue of pricing. As at this month, the available one goes for about N5.4-N5.5 million for 20MT and earlier in the year it was less than N3 million.

Another factor is availability, in the sense that the product is not readily available and most of the time demand outstrips supply.

Berthing schedule of the vessel, for now, out of three terminals we have, only one that principally serves LPG vessels while the others are reserved for other products as well as LPG. So, most times if the vessels that are carrying other products come, they are given preferential treatment.

Besides LPG, there are other products- Petrol, Diesel, Kerosene and Aviation fuel. Take for instance, the current epileptic flight operations in the country now occasioned with inadequate supply of aviation fuel, government in trying to rescue the situation, berthing preference is given to aviation fuel carrying vessels and same goes for PMS too. When these situations arise, the LPG vessels may not berth and an artificial scarcity is created and of course price starts escalating when supply cannot meet with the demand.

But we must give kudos to NLNG because without them, it would have been difficult for us to meet demand.  We believe that with time, as the awareness increases, NLNG will also be able to increase the volume for domestic consumption so that there wouldn’t be  situation for any imported quantity to close any gap between what NLNG makes available and the total local consumption.

So, what is the reason for the hike in the price of LPG?

We are a FOREX dependent nation and LPG even though is gotten from within the country (through the NLNG in Bonny), it is still subject to international pricing (Mont Belvieu pricing). Knowing what it is to source for forex, there will always be that price volatility. All the filling plants in the country virtually provide their own source of power supply, the cost of diesel to run the generators, haulage cost are all contributory factors.

So, we can safely say that the FOREX crisis is the major problem for the increment in the price of LPG?

Yes of course. Your mission statement is to make available gas at affordable price, but the thing is that since it is not affordable, the people may not be receptive to it.

The thing we do is to draw awareness of the government to what is going on. If you don’t talk about something, everyone assumes it is well. So, when the price rises, we draw attention to it. But the government is equally involved in creating the awareness for the consumption as well.  So, we bring it to their knowledge  and  that this is what is going on. If it is not affordable, it means that the government‘s effort is wasted.

For instance, LPG used to be sourced from neighbouring countries; a 12.5kg cylinder was going for about N7,000. But for the earnest agitation of the association and other bodies particularly in 2007, the former President, Chief Obasanjo listened to the plight of the association and made it mandatory that NLNG must make available some quantity for local consumption hence the birth of the domestic supply scheme. At that time the price which was N7,000 came down to about N3,500. This was all through the concerted effort of the association. As it is now, nobody is happy about the high price.

The costs of other accessories have equally gone up; cylinders, burners, hoses, regulators etc and all these are imported components. All these things put together are responsible for the high price new convert from kerosene or firewood to cooking gas face.

Our efforts have been geared towards urging the government to grant reasonable incentives to investors in the industry and also ensuring that the refineries are back in operation so that gas is readily available.

Looking at the Made-in –Nigeria campaign, how do you think local investors can tap into the LPG?

If the enabling environment is provided by government and policy is made to protect the local investors, l am very certain that there are investors who will be willing to put their resources into local production.

How many companies even produce cylinders in Nigeria?

With the hope that the new Gas Policy will be implemented, do you see foreign investors coming to pump money into the sector?

Yes .You make a  progressive policy of that nature because you want an improvement. That is why they came up with that idea.

We have had numerous policies over and again, do you think this new policy will be different from the past?

We have to be optimistic. If they were not optimistic, definitely they would not have looked into it. But the fact that something did not work out in the past, and people have made up their mind that this time it  must work does not mean we should not give it a trial. The involvement of the office of the Vice President and the Minister of Petroleum Resources in the project show you the seriousness of government this time around.

So, we believe and hope that the efforts put into formulating the policy is because the government attaches seriousness to it.

So, with the government body language, you are sure that definitely, it will be implemented…

We hope for the best that things will work out fine. Nigeria is one of the top producers of LPG in Africa, yet we are among the least consuming countries. It’s a shame. We should firmly position our country for the greatness she deserves.

What are your expectations for 2017?

We expect that by the end of 2017, we should be looking at a consumption of about 600,000 metric tonnes. Government’s projection is that an additional 4 million households  would convert to cooking gas in 2 years and 10 million in 5 years with an additional 21 million thereafter. The point is that we want to make LPG, the number one source of cooking energy. Even in terms of health, you cannot compare it to firewood and kerosene. Apart from health, when you look at the environment, by the time you start cutting trees for firewood, think of the environmental impact.

Out of about 150 million people, if we have 100 million using LPG, you know what that means.

That means there will be more money for the LPG market?

We are not talking about just money. Why don’t you say more healthy citizens? Agreed that in every business, the target is to make money, but if we have more people converting to cooking gas, we are talking about overall healthy citizens especially if you look back at the health hazards encountered in cooking with other dirty fuels like firewood, kerosene, etc.

If the LPG usage is imbibed to the level of our expectations, first of all we will have healthy citizenry and secondly conserve our environment.