Nigeria LPG market needs $750m in three years for infrastructural development

In order to have a successful Liquefied Petroleum Gas ( LPG) utilisation programme in the next four years, Nigeria needs an estimated $750 million to boost infrastructural development and this is to be done through private sector initiative according to Dayo Adesina, Senior Special Adviser to the vice president on Domestic Gas.

The critical areas, where the money would be deployed, are transportation and retailing; this is because it is estimated that about 3000 LPG filling plants would be required to meet consumers’ demand for the period under review while 10,000 trucks (bobtails, bridgers) are needed also. Another 5000 bridgers along with additional skids would be required.

According to 2019 update on the National LPG Expansion Plan, part of the plan to ensure nationwide LPG usage in Nigeria in six months would require rapid scaling of LPG usage through a combination of awareness, sensitisation, infrastructure delivery and funding starting with household usage.

The Federal Government is also required to create awareness for the usage of the product nationwide by using various media to target focus populations.

High level of sensitization and enumeration for use and safety training, build data for business models are encouraged.

Other steps taking are delivering Fiscal incentives via VAT, duties, tariffs tax holidays to stimulate investors. Reviewing the Regulatory framework, Health Safety & Environment Policy and tracking enforcement.

Meanwhile the Federal

Government is planning to flood the market with 50 million LPG cylinders in the next few years according to industry sources just to help promote the usage of the product among Nigerians.

Modalities for funding the cylinder scheme is still in the works,the source said.

The current national consumption of 780,000 metric tons per annum constitutes a fraction of the annual potential which has been projected at between 3million – 5million metric tons per annum. The market is a $10 billion economy

There are also plans by the government to ensure that the consumption level of LPG in the country hits between 900,000 metric tons to 1,000 000 million metric ton by the end of this year, two million metric tons in 2023 and five million metric tons by the year 2028.

The most important item in the LPG value chain which is the cylinder will henceforth be owned by companies as against the current practice where individual consumers own them.

One of the sources told Businessday that the government has approved that 20 million cylinders should the injected to the rural areas in the nearest future.

For immediate needs of consumer, the Federal Government is planning to ensure that about two million cylinders get into the market.

Also commenting, Nuhu Yakubu, president of Nigeria Liquified Petroleum Gas Association( NLPGA) and managing director of Banner Energy Limited urged the Federal, states, and Local Government Authority Urban and regional planning and approving authorities to introduce LPG into building codes, in addition to electricity, and water piping in order to ensure safety and proper alignment of its usage domestically.

He said it is heart warming that banks now have better perspective of the business as they now accept LPG assets as collateral for funding the business.

Nigeria has one of the fastest growing LPG sectors in the world.

Around 40percent of domestic LPG supply relies on imports through the coastal facilities in Lagos, Calabar, Oghara and Warri, as well as from the neighbouring Niger Republic.