Despite the Nigerian government’s recent ban on Liquefied Petroleum Gas (LPG) exports, which took effect on November 1, 2024, experts caution that Nigerians may not see significant relief in cooking gas prices anytime soon.
The policy was introduced to stabilize domestic LPG prices and improve local availability by mandating that producers, including the Nigerian National Petroleum Company Limited (NNPCL), either halt LPG exports or import equivalent volumes at cost-reflective rates.
Ekperikpe Ekpo, Minister of State for Petroleum Resources (Gas), confirmed that the Nigeria Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) is set to implement a new local pricing framework for LPG within the next 90 days. This framework aims to decouple local prices from global market trends, potentially insulating Nigerian consumers from volatile international pricing.
However, when contacted by Leadership Newspaper, officials from the gas ministry, NNPCL, and NMDPRA declined to comment on the current status or expected outcomes of the export ban.
Industry leaders remain cautious about the policy’s potential impact. Lanre Bayewu, Executive Secretary of the Nigerian Liquefied and Compressed Gases Association, warned against expecting an immediate or dramatic drop in cooking gas prices. He pointed to various economic challenges, such as the persistent weakness of the naira against the dollar, which keeps gas prices elevated due to the need for dollar-denominated transactions. Additionally, Bayewu highlighted other factors like high production costs, inflation, and a lack of adequate infrastructure that continue to push LPG prices up.
While Bayewu acknowledged that the export ban might slightly increase LPG supply within Nigeria, he emphasized that meaningful price reductions would require broader reforms. For example, the high energy costs and the foreign currency-denominated fees for operating licenses put further pressure on the industry’s ability to offer competitive prices. Furthermore, inadequate infrastructure for transporting and blending LPG compounds these issues, as limited blending facilities lead to bottlenecks and higher costs for consumers.
Nigeria’s LPG market has seen substantial growth over the years but recently hit a plateau. Data from the National Bureau of Statistics (NBS) reveals that the cost of LPG surged by 80% between January and September 2024, while retail prices for a 12.5kg cylinder rose by 39% during the same period.
In response to these price hikes, the federal government took steps earlier this year to ease the financial burden on households by exempting LPG from value-added tax (VAT). Additionally, Minister Ekpo has outlined plans to develop new domestic blending, storage, and distribution facilities within the next year. These facilities aim to improve access to LPG across the country and include provisions to adapt the Escravos LPG mix, traditionally exported, for local use in cooking.
Despite these measures, industry analysts suggest that achieving lasting stability in the LPG market will require strong political will and consistent policy implementation. While the Nigerian Liquefied Natural Gas (NLNG) company has played a pivotal role in expanding domestic LPG availability since 2007, other producers are still adjusting their operations to redirect supplies for local consumption.
Ultimately, the export ban, while a positive step, represents only one component in addressing the larger systemic issues affecting Nigeria’s LPG market. Addressing these underlying economic, infrastructural, and policy challenges will be crucial to achieving affordable and stable cooking gas prices for Nigerians.
