Cooking Gas Prices Set To Stay High Amid Export Ban, Industry Explains

Despite the ban on Liquefied Petroleum Gas (LPG) exports that took effect on November 1, 2024, experts suggest that Nigerians are unlikely to see a significant reduction in cooking gas prices. The ban, intended to stabilize prices and increase local supply, mandates that domestic producers, including...READ MORE…

the Nigerian National Petroleum Company Limited (NNPCL), stop exporting LPG or import an equivalent volume at cost-reflective prices.

The Minister of State for Petroleum Resources (Gas), Ekperikpe Ekpo, confirmed that the Nigeria Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) will introduce a new local pricing framework within 90 days, moving away from international market benchmarks.

However, officials from the gas ministry, NNPCL, and NMDPRA were unavailable to provide updates on the status of the export ban when contacted by Leadership Newspaper.

Lanre Bayewu, the Executive Secretary of the Nigerian Liquefied and Compressed Gases Association, warned that a significant reduction in LPG prices is unlikely. He attributed this to ongoing challenges such as dollar-based gas pricing, a weak naira, inflation, and inadequate infrastructure.

While the export ban may slightly improve local supply, Bayewu stressed that meaningful price reductions require addressing broader systemic issues, including high energy costs and foreign currency-dependent licensing fees. Additionally, poor infrastructure for transportation and blending facilities further exacerbates the pricing challenges.

Nigeria’s LPG market, which has grown considerably in recent years, has faced stagnation. According to the National Bureau of Statistics, the price of LPG increased by 80% between January and September 2024, with retail prices for 12.5kg cylinders rising by 39% during the same period.

In an attempt to ease the burden, the federal government exempted LPG from value-added tax earlier this year. Ekpo also revealed plans to develop domestic blending, storage, and distribution facilities within the next 12 months, which would make LPG more accessible to households. This includes plans to adapt the Escravos LPG mix, which is currently exported, for local consumption.

Despite these initiatives, industry experts emphasize that achieving market stability will depend on political will and the consistent implementation of policies. Although the Nigerian Liquefied Natural Gas (NLNG) company has been a key player in the domestic LPG market since 2007, other producers are still working on adjusting their supplies to meet local demand.

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