‘Why price of cooking gas is high’
The president, Nigeria LP Gas Association (NLPGA), the umbrella body of stakeholders in the Liquefied Petroleum Gas (cooking gas) sector in Nigeria, Dayo Adesina, speaks on how the association is partnering enforcement agencies to curb the activities of illegal operators in the sector.
There is a new draft gas policy in which more attention will be given to the use of LPG. What form of input did your association make in the policy?
We didn’t get much traction with the last government but now we are getting a bit more with this government which seems to be a lot more serious with LPG and in fact has engaged with us more in the last nine months than the previous government did in six years.
The policy is not as robust as we want it to be but we have made input and also referred them to the previous one we had done with the National Planning Commission which was a lot more encompassing and they have agreed to condense that policy which was LPG specific to the new policy. Even if we don’t get a perfect document but at least it is a start and a work in progress.
We made our submission on the basis of a lot of the challenges in the industry that we need government to sort out.
You have been engaging enforcement and regulatory agencies to flush out illegal operators in the LPG market space. How will you sustain this?
Clearly there needs to be a lot more enforcement from the regulatory agencies because we have seen a lot of illegal skid tanks that pose a great hazard. Safety is the first thing we look at in this industry. Any major incident could destroy the entire industry and this is what we are trying to avoid especially since the government is now paying more attention.
Of course if they give us the full backing, it means that a lot more people will start to participate in this industry which is what we are looking for so that every single home can be serviced by LPG. If you have too many illegal operators and equipment, it is only a matter of time before you have incidents and that is exactly what we are trying to avoid.
Nigeria Liquefied Natural Gas (NLNG) company supplies around 250,000 tons of LPG to over 170 million Nigerians who need around 5million tons. Is there an LPG supply gap in Nigeria?
There is enough supply from NLNG if the market is ready to absorb it. What has been the problem are infrastructural challenge and the fact that jetties or receiving terminals are only three in Lagos. In two of the terminals that are multiproduct terminals where you have ATK, PMS and others, priority is given to those products rather than LPG.
Compared to the one terminal that has a dedicated jetty, regardless of when the vessel gets there it will be able to discharge but it is not so in the multiproduct terminal. Some time you have delays of 15, 20 and 45 days although that has been resolved to some extent because of a lot of engagements with NLNG and PPMC. Those two multiproduct terminals are beginning to get a bit more access for discharge.
So, it has mostly been infrastructural problem and that is why a lot of private sector players are now looking at building more terminals in Port Harcourt and Calabar. There are quite a lot of terminals on the infrastructure side which would come on stream and that would help.
Truly, the product is available in-country but the infrastructure challenge has made it difficult for regular discharges to take place and that has created room for people to import when there is no need for that and NLNG has said that even if we need to go to a million tons they are ready to supply as long as the market can absorb it.
Apart from funding, what are the other bottlenecks hindering investors from building terminals?
Definitely, challenges with tariffs on equipment. The tariffs on imported equipment like accessories, valves, regulators, cylinders are extremely high such that by the time they come out of the ports it is almost about 40 percent.
Local manufacturing needs to come into play, unfortunately a lot of the raw materials for that will be imported as well. So, if you don’t take a holistic approach and make sure that anything to do with LPG gets the barest minimum in terms of tariff and duties then it will have a negative impact on the final outcome.
For example, we had two cylinder manufacturing plants that shut down because the flat steel became extremely expensive and the cost of production became so high they couldn’t compete with cheap import.
We need to be able to stimulate local production by making sure that there is environment that is conducive and that is why government support is critical.
Is your association lobbying government in any way to get tariff breaks or concessions to
import LPG accessories?
We have been lobbying government for quite some time, in fact through the Nigeria Economic Summit Group (NESG) we have made a presentation to the finance minister and it is something that we have particularlyhighlighted. Even in the submission we made to the National Council on Hydrocarbon, we listed the tariffs and duties and how they impact us negatively. It is something that is high on our agenda.
Nigerians can’t easily transit to LPG because it is very expensive. Why is the price very high despite the fact that it is produced in-country?
It still goes back to the infrastructural challenge which is why when we say we need government, we don’t need it to give us money; we need government to make the atmosphere conducive. How is it that NIMASA and NPA are charging dollars for services in Nigeria? All those are some components that make up the price.This resource needs to get to the people and infrastructure is one way it can get to them.
Today, anywhere you want to get LPG in the country your trucks need to go to Lagos first to pick up the product. But if there were storage terminals all over the country, if the product could move by rail then there won’t be the misnomer where you have to pick the product from Lagos.
Nobody is going to put his money if he is not going to recoup his money and which is why for many years we had been screaming that supporting kerosene which kills people was not the right way to go. The right way to have gone was to support LPG.
There is phobia for the use of LPG especially among rural dwellers. What is your association doing in terms of creating awareness about the safety of LPG?
We have been running awareness campaigns for quite some time but I keep referring to government which has the biggest communication infrastructure in the country. NTA and Radio Nigeria are in the 36 states of the country, and state government radio stations in addition. It is very critical for people to know that LPG is safe and that it is unsafe practices that will lead to incidents, which is why awareness is critical and should be done in different languages.
But on our own, we do awareness through the social media and leaflets. From all the areas our members operate in the country, we pass the message down but it is still not enough because we are only a tiny part of 180 million people, the might of the government is required.
Definitely, challenges with tariffs on equipment. The tariffs on imported equipment like accessories, valves, regulators, cylinders are extremely high such that by the time they come out of the ports it is almost about 40 percent