OPENING COOKING GAS MARKET WILL CRASH THE PRICES - CONSUMER ASSOCIATION

 

The Cooking Gas Consumers Association of Nigeria (CGCAN) has reacted to the continued high cost of the ex-depot pricing of Liquefied Petroleum Gas (LPG), often known as cooking gas.

It claimed that the participation of middlemen in the gas business was a major contributory element to the country's exorbitant and increasing price of the vital item.

Dr. Hakeem Olajide, National President of CGCAN, was reacting specifically to reports attributed to Mr. Suresh Kumar, Managing Director of Nigerian Independent Petroleum Company, NIPCO Plc.

Remember that the Managing Director of NIPCO Plc, Mr. Suresh Kumar, declared that "local production of LPG was not at par with domestic demand, as the industry had expected that Nigeria should have grown to a two million metric tons per annum market."

According to reports, the NIPCO CEO explained that local LPG production from Nigeria and other International Oil Companies (IOCs) was insufficient to meet local demand, despite the fact that the country's domestic LPG market grew from 2,000 metric tons per year in 2014 to 1.2 million metric tons in 2020. 

"But from 2020, we started witnessing a decline basically due to low local production and increased level of imports," he had said.

He went on to say that in order to close the demand gap, the industry needs to increase the volume of imports, despite the fact that imported LPG is significantly more expensive than domestically produced LPG.

However, in a statement made yesterday by its National President, the CGCAN poked holes in several of NIPCO's claims, claiming that his association's investigations revealed that "the marketers of LPG in the country, whom we have interacted with over these years concerning the hike in the price of cooking gas, have repeatedly told us that the hike, which we all bear the brunt, was as a result of middle men that play gods in the industry, who the regulatory agencies have continued to use in hijacking and manipulating the prices of cooking gas in the domestic gas market.

"These middlemen are the people who do not have requisite conditions, or licensed plants, but are known to the regulators. Sometimes they register fake companies and claim to have agreements with plant owners.

"Meanwhile, the real plant owners are subjected to ridicule and are sidelined and manipulated, to suit their preferred non-qualified middlemen, as licensed plant owners are made to waste their hard-earned resources in chasing after long list of requirements for them to be part of Offtakers, an effort that normally ends with no tangible result.

"Why we are talking now is to let the world and Nigerians in particular to know that our association, the Cooking Gas Consumers Association of Nigeria (CGCAN), has taken upon ourselves to investigate, and in the course of such investigation, we interacted extensively with other stakeholders on why the cost of cooking gas in the country is on the high price against what is obtainable in other parts of Africa.

"We met with some plant owners on this, and found that they, the plant owners or marketers as the case may be, are afraid to comment or come openly to do anything because of fear of victimization and blacklisting from the power-that-be. But, on our own, we must continue to talk about it because we are the final consumers of the cooking gas, in our various homes and business premises.

"Again, late last year, we brought to the knowledge of Nigerians, through the media, the various bad dealings going on in some agencies of government that are entrusted to ensure efficient and cost-effective distribution of LPG to Nigerian homes, by ensuring a level- playing field for all the industry's stakeholders.

"But our call for sanity and fair play in the industry was not heeded, as those in NLGN are still not ready to make the price of gas to crash, because they have continued to connive with some selected Offtakers to operate in secrecy, thereby manipulating the cost of the cooking gas to the detriment of ordinary Nigerians.

"We have said it before, and we are going to reiterate it here again, there is enough gas for domestic use, against the negative picture they are painting.

"The cabal within the Offtakers cycle has continued to frustrate efforts being made to make the price of domestic cooking gas avoidable to Nigerians, because of price manipulation that suits their caprices."

The CGCAN president also noted that, "while the Offtakers get LNG product at a reduced price, they (offtakers) will, on the other hand, sell to plant owners at inflated prices, thereby making huge gains before it gets to the actual users like us."

The difference in gain, he pointed out, "is the major reason more plant owners are blocked from getting license to lift gas by some corrupt officials of NLNG, who are paid handsomely by the few Offtakers to allow the status quo to remain the same."

Olajide claimed that the fundamental issue with the NLNG supply chain was the unscrupulous manner in which the (NLNG) was operated, "selects the so-called Offtakers, as most companies that NLNG operate with, are not qualified companies, while the qualified companies are stepped down simply because of the returns they get from the unqualified ones.

"That is more reason they have kept the list of the Offtakers secret, including the model and criteria of selecting who qualifies as Offtakers, whereas the criteria for who becomes an Offtaker should include the storage capacity, trucking capacity and spread of gas plants, especially to the urban and rural areas.

"We charge them to expand the Offtakers based on merit and criteria mentioned above, cut-off middle men otherwise known as the cabal, in order to make cooking gas available to the masses at a reduced price."

He stated that based on his association's interactions with plant owners, it is clear that integrating more qualified gas plant owners as Offtakers will dramatically lower gas prices, contrary to some predictions.