The cost of filling a 12.5kg cylinder of cooking gas in Nigeria may hit N12,000 or more by November, up from N9,800 as of October 14, 2022.
The concern was raised by some energy experts during separate interviews with Nairametrics.
According to them, if the flooding persists till November amid other industry issues, it will cost Nigerians N12,000 or more to fill a 12.5kg gas cylinder. However, the price hike could be averted if the challenges are addressed.
What they are saying about the hike
Energy Consultant, Gboyega Amu, warned that the flooding, which was caused by unusually heavy rains and the release of water from a Dam in Cameroon, could continue into November.
According to him, the factors that will contribute to the price hike by November are flood, the force majeure declared by the Nigeria Liquefied and Natural Gas company (NLNG), and the oil theft menace among others.
He said, “The cost of 12.5kg is expected to hit N12,000 or more by November, as NLNG’s declaration could worsen Nigeria’s cash crunch and would curtail global gas supply as Europe and others struggle to replace Russian exports due to the invasion of Ukraine in February. NLNG had said all of its upstream gas suppliers had declared force majeure, forcing it to also make the declaration.
“The notice by the gas suppliers was a result of high floodwater levels in their operational areas, leading to a shut-in of gas production which has caused significant disruption of gas supply to NLNG.”
Like Amu, a source in NLNG, who preferred anonymity, disclosed that the cost of the commodity would increase by November due to the factors mentioned above.
According to him, NLNG’s supply had already been limited due to prolific oil theft that has slashed output from what is typically Africa’s largest exporter, adding that the NLNG had exported roughly 18 cargoes in September.
He said, “Nigeria relies on fossil fuel exports for 90 percent of its foreign exchange and roughly half it’s budget. Crude oil exports fell below one million barrels per day on average in August, the lowest level since the 1980s, due to theft that has exceeded 80 percent on certain pipelines.
“The notice by the gas suppliers was a result of high floodwater levels in their operational areas, leading to a shut-in of gas production which has caused significant disruption of gas supply to NLNG.
“The incessant hike in the price of cooking gas coupled with the dwindling purchasing power of the average Nigerian does not bode well for the continued adoption of LPG by both rural and urban dwellers, and it is outrightly counterproductive to the government’s widely publicized LPG policy.”
What you should know
Force majeure is a common clause in contracts that essentially frees both parties from liability or obligation when an extraordinary event or circumstance beyond the control of the parties, such as a war, strike, riot, crime, epidemic, or sudden legal change prevents one or both parties from fulfilling their obligations under the contract.
In case you missed it
Nairametrics had reported that Nigeria’s revenue crisis and gas shortage challenges appear set to worsen, after one of the country’s main foreign exchange earners, the Nigeria Liquefied Natural Gas (NLNG) Limited, declared force majeure on its 22.2 million ton per year Bonny LNG export facility. The multinational gas firm took the action due to widespread flooding that has disrupted supply.
The development is coming as Nigeria battles its worst floods in about a decade, with no fewer than 500 people reported to have been killed and billions of naira worth of properties damaged.
Nairametrics had also reported that the cost of purchasing a 12.5kg cylinder of household cooking gas in Nigeria increased from N7,000 in September 2021 to N9,400, as of May 31, 2022,
A cursory look at the data shows that the price increased to its highest level in over three years. Specifically, a 12.5kg cylinder of household cooking gas increased to its highest since November 2018.
This was confirmed by our analyst after conducting interviews with dealers and consumers, who lamented over what they described as a progressive hike in the price of Liquified Petroleum Gas (LPG), commonly known as cooking gas, across major cities in Nigeria.
