Price Of Cooking Gas To Drop Drastically As Tinubu Issues Excitinf Order To LPG Producers

The Federal Government of Nigeria under the administration of President Bola Tinubu has once again ordered domestic producers of Liquefied Petroleum Gas (LPG), commonly known as cooking gas, to stop exporting the commodity.....Read Full Article>>

This directive is part of efforts to control the steadily increasing cost of cooking gas, which has been a burden on many Nigerians.

The mandate was issued by Ekperikpe Ekpo, the Minister of State for Petroleum Resources (Gas), during a meeting held in Abuja on Tuesday, October 2024. Ekpo emphasized the need for urgent action to stabilize the domestic market for LPG, which is essential for everyday cooking in Nigerian households.

To provide immediate relief, the minister directed that from November 1, 2024, the Nigerian National Petroleum Company Limited (NNPCL) and other local LPG producers must cease exporting LPG that is produced within the country.

If any producer exports LPG, they are required to import an equivalent amount of the product at cost- reflective prices, meaning the price must align with the cost of production. This measure aims to increase the supply of LPG in the local market, potentially reducing prices for Nigerian consumers.

Ekpo’ s decision came after a high- level meeting with key stakeholders in the LPG industry. The meeting was convened to address the hardship caused by the skyrocketing price of cooking gas, which has soared in recent months.

As part of the long- term plan to stabilize cooking gas prices, the minister also ordered the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) to collaborate with industry stakeholders to create a new pricing framework.

The new framework must be developed within 90 days and should base the price of LPG on the cost of local production rather than using international benchmarks such as those in the Americas and Far East Asia.

The minister noted that despite Nigeria’ s natural abundance of LPG, consumers are still paying high prices for the commodity because of the current practice of linking domestic prices to external markets. This new approach is expected to make the price of cooking gas more affordable for Nigerians, as it will better reflect local production costs.

Looking beyond the immediate actions, the Federal Government is also working on a long- term solution to achieve price stability and market sufficiency.

According to a statement from Louis Ibah, the minister’ s spokesman, facilities for blending, storing, and delivering LPG will be developed over the next 12 months. During this period, the export of LPG will remain suspended until the Nigerian market reaches self- sufficiency and prices stabilize.

This long- term strategy aims to increase local production and supply, ensuring that Nigeria does not need to rely on imports or export its locally produced LPG.

The directive comes at a time when the cost of cooking gas in Nigeria has reached record highs. Recently, the price per kilogram of LPG surged to ₦1, 500, up from an average of ₦1, 100– ₦1, 250 per kilogram. The rapid increase in prices has made it difficult for many Nigerians to afford cooking gas, leading to widespread concerns about energy costs and household budgets.

In November 2023, Ekpo had already set up a high- level committee led by the NMDPRA’ s Chief Executive, Mr. Farouk Ahmed, to find solutions to the escalating price of LPG. However, despite these efforts, the price has continued to fluctuate.