Home Business news GAS Price May Hits N850 per KG Soon, as VAT Imposition, Others...

GAS Price May Hits N850 per KG Soon, as VAT Imposition, Others Affects Sales

The imposition of Value Added Tax(VAT) on gas by the federal government, foreign exchange scarcity, high taxes and levies to gas marketers, among others, have influenced the current scarcity and hike in the price of Liquified Petroleum Gas (LPG) also known as cooking gas in the country, Leadership Weekend findings have revealed.

The price of 1kg of gas now sells at a minimum of N500, translating to about 66.6 per cent increase from N300 per kg as of the end of last year.
Further findings, however, showed that the price could rise to N850 or more per kg before the end of the year, if government and relevant stakeholders fail to address this challenge.
In the last one month, the price of a 20 metric tonne truck of LPG has witnessed a systemic rise from, initially, N7million to N7.2 million and then N7.3 million and N7.6 million and, last week, it jumped to N8 million. This is the amount the commodity is taken from the depots to the plants where it is refilled into the 12.5kg or smaller sized cylinders.
The price of 12.5kg is about N6,000 on the average at retail outfits in most parts of Lagos, Ogun and Abuja plants. The commodity however sold highest in Asaba, the Delta state capital, where the 12.5kg cylinder was sold for as high as N8,000 according to Leadership Weekend’s checks.
Findings across the states indicated that consumers of cooking gas in Osun State have called for immediate reversal of the price of cooking gas to its former price to alleviate the pains inflicted by the rise in price of the commodity.
A 12.5kg gas cylinder that used to cost #4,600 two months ago now sells for between #5,600 and #6,000.
It was gathered that many retailers who cannot explain what is responsible for the hike in the price can no longer afford to stock their cylinders, thereby creating scarcity at the local level while some consumers have resorted to other alternatives.
However, consumers have pleaded with government to intervene in the situation to alleviate their suffering.
In Niger state, a 12.5kg gas cylinder now costs N6,500 as against N4,500 about a month ago.
The product is available in most gas dispensing centres and filling stations in the state.
Some of the sellers interviewed attributed the increase in price to the increase in the wholesale cost, which has gone up due to the cost of importation.
A dealer, Abdullahi Dauda, said “though the authorities have debunked that claim , the people we buy from said they are also buying at high cost.”
Similarly, at one of the stations, the dealer who prefers anonymity said that “despite the cost, the product is available here in Niger state. We are selling based on the market forces; we are not just allocating prices. 1 kg used to be N300, now it is N500”.
In Ondo state, both the consumers and retailers have lamented the continued increase in the price of cooking gas across the 18 local government areas of the state.
Presently, according to them, the prices of cooking gas range from N500 to N550 per kg. Before the latest development, the price of cooking gas in the state was between N300 and N400 only.
A consumer, Mrs Adelugba Ayobami, noted that those who don’t have the financial means may dump their cylinders and opt for charcoal and firewood as alternatives.
Adelugba said, “We in rural areas and semi-urban areas are major targets of the increase in cooking gas price. This is not a good development at all. Those who had dumped the usage of firewood will now be forced to go back to it even though we all know that it has adverse medical effects on the people.
She said, “I filled my gas cylinder last month for N450 per kg. When I got there now, I was told that the price had increased to 500/kg. Some are even selling at N550/kg. This is too bad. Government should do something about this.”
A retailer, Mr Adegboyega Lawrence, said those of them that are into the cooking gas business are also suffering the effects of the increment.
Adegboyega said since the instability in the price of cooking gas, the number of consumers who patronise them had since reduced.
He said,”It has also affected our business. Most of our customers are no longer coming to buy again. The increment is not our fault. It is what we buy from the dealer that we are selling to the public.”
Like every state of the federation, there is a sharp increase in the price of cooking gas in Ekiti state.
The major gas retailers in Ado Ekiti, the state capital, now sell a 12.5kg cylinder of the commodity for between N5,900 and N6,200. The price rose by over 33 per cent from initial N360/kg to N480/kg.
As of July, 12.5kg of the cooking gas costs between N4, 200 and N4,500.
Presently, a kilogram of the commodity is sold at the rate of N470 at major gas stations while shop retailers sell between N500 and N550.
A shop retailer told our correspondent that he started selling 12.5kg for N7,200 and 6kg for N3,500 as one kilogramme of the cooking gas suddenly rose to N5500.
Cooking gas is, however, readily available for sale in all major gas stations and retail shops/outlets across the state.
On what is responsible for the price increase, one of the major marketers of the commodity said the hike may not be unconnected with the recent federal government reintroduction of value added tax (VAT) on imported liquefied petroleum gas (LPG).
He added that they had no option than to increase the price for them not to be running their businesses at a loss.
The price of cooking gas in Imo State keeps fluctuating as a 12.5kg cylinder costs about N7,000 as against N4,500 two months ago.The product is available in the filling stations and retail outlets in the state.
The gas sellers expressed concern at the astronomical increase.
Chibueze Odu, a gas seller, called on the federal government to intervene and save the citizenry from the rising cost of the product.
According to him, if nothing is done by the federal government, the marketers will continue to exploit the masses.
Residents of Ilorin, Kwara State, now refill a 12.5 kg gas cylinder at a cost of N6,300.
Investigation conducted by LEADERSHIP Weekend showed that the same quantity of the commodity was sold for N5, 400 a months ago.
A gas station filling attendant said, “We have to dispense gas based on the cost we get it from our suppliers.”
One of the major stakeholders and owners of cooking gas outlets in Dutse, capital of Jigawa state, Comrade Sunusi Husaini Madobi revealed that the price of the community has increased by over 100 percent in the last 10 months.
He said last year they sold 1kg of Cooking Gas at the cost of N220 to N230 but presently they are selling it at the coast of. N550 per kg.
Sunusi added that the persistent increase in the price of cooking gas would have multiple negative impacts on the nation as many families are now forced to resort to using firewood and charcoal for cooking their food.
“This unfortunate development will lead to the increase in the indiscriminate felling of trees which would consequently increase desertification, erosion , global warming and other related environmental degradation.
“For us in the business, our turnover has gone down seriously as many low wage earners , laborers and other less privileged persons cannot afford to buy the commodity.”
He then called on the DPR and federal government to come up with a policy that can make the commodity accessible and affordable to all.
Just like other states of the federation, the price of cooking gas has continued to rise daily in Ebonyi State which has forced many households to either resort to using kerosene or firewood.
In Abakaliki, the Ebonyi State capital, a 12.5kg cylinder is sold at N6,875 at the rate of N550 per kg.
According to a gas seller, Mr. Chidubem Ibiam, between July and August, 2021, 12.5KG was sold at N5625 at the rate of N450 per kg.
He attributed the rise in the price of the product to its scarcity at the different depot adding that it takes between five and six days for them to get supplies from Enugu.
According to him, at the Oando Depot in Enugu which is the major depot for most cylinder gas sellers in Abakaliki, “when we take our empty cylinders to the place, you have to wait until they take delivery and then inform us to come for our supply.”
He described the situation as worrisome noting that getting the supply from Enugu has become difficult and stressful as thousands of people now besiege the place for their supply.
As the prices of cooking gas continue to soar, families in Yobe State have witnessed an increase of about N3, 000 or 42.8% on the refilling of 12.5kg cooking gas cylinder over what was obtainable there months ago.
A 12.5kg cooking gas cylinder that was refilled between N4, 000 to N4, 500 in the last three to four months in Damaturu, now cost N6, 500 to N7, 000 while 6kg that hitherto refilled at the cost N2, 200 now cost N3, 500.
A 52-year-old man Ibrahim I. Ibrahim said, “It is very unfortunate that after winning the heart of people towards patronising cooking gas to avert deforestation, which is the major cause of desertification, many would be forced to go back to it due to the exorbitant price of cooking gas in the markets.
In Kaduna State, residents have lamented the high cost of cooking gas, calling on the federal government to urgently look into the matter.
A gas user, Mercy John, who was at one of the gas plants along Command junction, Television said:” It is unfortunate what we are going through. The federal government should look into this gas issue. The price is going up and our daily income is going down. We ordinary Nigerians have suffered a lot in this country and there is a need for the government to address our sufferings!” she lamented.
Another Kaduna resident who did not disclose his name also said:” I have decided not to buy gas again. I told my wife to use charcoal or firewood to cook because of the prices of gas,” he said.
A Lagos resident, Mr. Babajide Ajia, said the hike in gas price is a serious blow to Nigerians at a time the price of foodstuff is on the rise, as well as the general cost of living.
He said some of his friends, just like many Nigerians, had to reduce the volume of gas they purchase because of the price hike, even as he called on the government to build on the successes recorded in gas use penetration.
“This development can make some, especially restaurants revert to charcoal, and it’s a dent on the federal government gas project. Government must always make policies and decisions that will comfort the people and not make an already difficult living condition harder”, he pointed out.
Stakeholders told Leadership Weekend that lack of foreign exchange to import gas into the country is partly responsible as capacity for the companies producing LPG is just about 60 per cent while the remaining 40 per cent is imported. The situation is being compounded with the introduction of VAT on the commodity.
Executive secretary of the Nigerian Association of Liquified Petroleum Gas Marketers (NALPGAM), Bassey Essien, expressed concern over the sincerity of the government in dedicating enough volume for LPG use.
“I should be asking you where the rising volume in gas production is going. Go to depots and ask the Nigerian Liquefied Natural Gas (NLNG) the volume dedicated for domestic use.
“In December last year, local LPG consumption rose to about 1.2 million metric tonnes; 35 percent of that volume was locally sourced and 65 per cent was imported. So, where is the figure we are claiming?” he queried.
He doubted the figure being presented by the government, adding that 65 percent of LPG consumed in the country is sourced from outside Nigeria.
The marketers, he said, should not be blamed for the hike in the price of LPG, stating that out of the 1.2MT being consumed in the country, NLNG only supplies about 300, 000, which should not be so in a country that produces the product.
“We are currently consuming about 1.2million metric tonnes and you are saying you are doing 450,000 metric tonnes. Where will the balance come from? I sell what I see, I don’t produce gas. It is when and how I buy that I sell. If people say they cannot afford it, that is not my fault. People have to pay, they have to eat, people have to sell the gas. NLNG said they produce over 4million metric tonnes per annum and we are just consuming under 1.5 million. What stops them from increasing the quantity here?,” he asked.
Essien added, “You will go and export all and we go back and import all. So, marketers sell what is available to them. They have to source for dollar which is not our own currency and they have to make some profit to remain in business.”
Reacting to this development, the past director general of the Lagos Chamber of Commerce and Industry (LCCI), Muda Yusuf said the recent hike in LPG price is inimical to the drive to promote the use of clean energy and protect the environment.
“It is noteworthy that significant progress has been made in getting a good percentage of the population to transit from the use of firewood and kerosene to the use of LPG. The campaign has won a lot of converts even in many of our villages.
“The spike in LPG price may reverse these gains and this will not augur well for the preservation of the environment. We may see a relapse of accelerated deforestation if the spike is not checked. Gas pricing needs to reflect the reality that we are a gas producing country. We should leverage the huge gas resources to leapfrog in our industrialisation initiatives and environmental protection.”
Similarly, the chief research officer at Investa, Ambrose Omokordion, said there is a compelling case of economic law at play as in short supply trumping demand, even as the recent devaluation of the Naira equally impacts on the pricing.
“Now, the price of cooking gas has risen by more than 60 per cent since early December last year on the back of the recent devaluation of the naira and lingering inadequate domestic supply of the fuel. Going forward, what we need is complete deregulation, and not knee-jerk response,” he pointed out.
Responding to the issue, the special adviser to the president on LPG, Dayo Adesina, said the government was going to look at the situation.
“The federal government is doing something about the issue so as not to allow its efforts to go to waste because of the high price of the commodity. The government is working assiduously to look for additional sources of LPG in the country to reduce the foreign exchange component of the price,” he said.
The federal government has stated that the country still imports 60 per cent of its local consumption in LPG which is the reason for the rise in cooking gas price.
Adeshina noted that the country needs more domestic production of LPG to force down the cost.
“We will be seeing the coming onboard of more local production by indigenous companies from next year. Currently, the nation supplies about 2 million metric tons of Natural Liquefied Gas to consumers of which 60% of it is imported.
“We are expecting that companies like Seplast, ANON gas will come on stream next year. We need more domestic sources of supplies so that we don’t rely on importation.”
He added that the federal government will roll out 5-10million gas cylinders in 12 states of the federation next one year.
On introduction of VAT which Nigeria Customs Service backdated its payments, he said, it was just brought to the attention of the government then and that it would address it appropriately.
“We are not self-sufficient and had to import to augment the supplies from Nigeria Liquefied Natural Gas Limited through import; that is why it is affected by Foreign Exchange. I am sure when we are able to find additional sources and there is competition, the price would come down. The NLNG was only able to provide 450,000 tonnes last year and the consumption of the country has hit over 1 million metric tonnes per annum. We are not happy that the price of the product has increased,” he said.
Adeshina explained that the federal government is currently working on other domestic sources, noting that it was imperative to drive a large volume into the market to ensure competition.
The DPR, in response to this, said if the government hoped to generate revenue from VAT introduction through retention of importation, the implication would be a disservice as potential investors would be discouraged.
Efforts to get the NNPC to comment were abortive as calls put through to the group general manager, group public affairs unit of the corporation, Mr Garba Deen Mohammad, were not answered.
Also, text messages to his phone, which indicated that it was delivered, were not responded to.

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