If you reside in Lagos and Ogun State and use cooking gas then you probably pay between N3,000 to N3500 for a 12.5Kg cylinder of Gas. The increase in Gas prices in Nigeria has been blamed on the rising cost of international gs prices which incidentally is passed on to the local market. In Nigeria Cooking Gas otherwise called LPG is supplied locally by the NNLG. The Gas company claims to supply about 70% of the Gas needs in Nigeria. The rest is imported into the country. Despite the huge advantage over kerosene, LPG is still mostly unpopular. This got me wondering why?
Nigeria is thought to produce about 2m tonnes of LPG (Cooking Gas) a year and is expected to hit 4m metric tonnes soon. Yet most of this is exported with just 150,000 metric tonnes left for the domestic market. Even at that Nigeria consumes an average 60,000 metric tonnes (according to this PPPRA Report) per year, way below the 150,000 that is left for the local market. A very minute quantity for a country of 150m people. Ghana consumes 70,000 metric tonnes, South Africa 220,000 metric tonnes, Morocco 1,455,000 metric tonnes and Egypt 3,370,000 metric tonnes per annum respectively. The population of these countries combined is still not more than that of Nigeria. This only show the huge potential the Nigerian market portends.
Why don’t we prefer Kerosene?
A report I once read assumed that the level of development of a country can be inferred from the percentage of food consumption amongst its general consumption pattern. Meaning the higher your citizens spend on food the less developed your country is. I think that can be said of LPG as well. Nigerians preference of kerosene can also attributed to high poverty levels in the country. It can also be tied to a misconstrued belief that it is for the privileged, the rich. Another possible reason why LPG isn’t as popular may also be with the pricing. At N3,500 per 12.5KG cylinder, the cost of an LPG seem farfetched for some who are used to fending for themselves “hand to mouth” “hand to mouth”. At N600 for a 4 liter Keg of Kerosene they can manage for at least 3 days helping them allocate cash to feeding. Marketers also allude the poor consumption to a limited availability of gas cylinders which make in itself makes the Gas cylinders expensive to buy. This deters would be users who have to cough out about N10,000 for a cylinder in addition to buying cookers. They also complain of poor distribution network with only 150,000 trucks serving the entire country.
What can be done?
I’m no Gas analyst so advising on what can be done is not in my place. However, I do know that the opportunity is there for Investors and I do not see why this cannot be explored. I also believe players in the LPG market need to be a lot more creative with the packaging and distribution of the product. Make it more affordable by introducing smaller cylinder sizes which obviously will cost lower and attract poorer people. The Government also has a large role to play in all of this. Tax incentives should be given to investors whilst local manufacturers of the cylinders should also be encouraged. Since Gas production is obviously not an issue efforts should be directed at attracting consumers. This surely will involve making cylinders more affordable, gas distribution much more evenly spread and prices properly crafted to ensure affordability.