The Nigerian Liquefied Natural Gas (NLNG) has absolved itself of the sole blame for the high cost of cooking gas, which is perceived to be driving Nigerians towards some other ‘deadly alternatives’.
The company, in its response to a publication in The Punch newspaper of 29th August 2021 entitled ‘How high cost of cooking gas leaves Nigerians with deadly alternatives’, said in a statement that the increasing price of cooking gas is a combination of factors, including Value Added Tax, Foreign Exchange, among others.
It said it is grossly inaccurate to state that NLNG produces 22 million tonnes per annum (MTPA) of Liquified Petroleum Gas (otherwise known as cooking gas).
“NLNG is primarily an export company that produces 22 MTPA of Liquified Natural Gas (LNG) and 5 MTPA of Natural Gas Liquids (NGLs),” it said, in a statement by Eyono Fatayi-Williams, NLNG’s General Manager, External Relations and Sustainable Development.
The company also said it is erroneous to claim that NLNG contributes to the supply shortfall of cooking gas in Nigeria and the consequent price hike.
“The price of LPG in the domestic market is dependent on several market factors, including the forces of demand and supply.
“On the supply side, NLNG plays a pivotal role in the Nigerian domestic LPG market in line with the commitment it made to help deepen the market.
“Recently, the company increased the volume of its annual commitment to the market from 350,000 to 450,000 metric tons, which is about 100% of its Butane production. Butane gas is less volatile and is, therefore, suitable for cooking.
“In 2020 alone, NLNG supplied over 80% of its LPG sales (Butane/cooking gas) to the Nigerian market.
“By committing 100% of its Butane production, NLNG has prioritised the domestic market, thus realising its domestic supply target safely.
“NLNG’s current maximum Butane production meets about 40% of domestic demand. The balance is supplied by other domestic producers or via imports. Therefore, NLNG’s production alone is not sufficient.
“In order to achieve its aspiration for the domestic supply, a dedicated 13,000 metric ton vessel, LPG Alfred Temile, delivers the product to the market through Lagos and Port Harcourt terminals.
“The vessel’s delivery to these terminals is occasionally hampered by challenges at the terminal, including storage capacity, terminal access, draft restrictions and prioritisation of other products over LPG.”
It stresses that NLNG’s domestic LPG pricing is most competitive compared to all other alternatives (imported and domestic supply); but that several factors such as VAT, Forex, etc., impact the pricing of the product, which is indexed to the international pricing model.
It expressed optimism that the eventual completion of its Train 7 Project will further deepen the domestic LPG market.