Business

Nigeria Considers Stoppage of LPG Exports over Escalating Gas Prices

Nigeria’s Minister of State Petroleum Resources (Gas), Ekperikpe Ekpo, on Thursday, has said the federal government is considering halting the export of Liquefied Petroleum Gas (LPG) also known as cooking gas, to slow down the escalating prices of the product.

Speaking on the sidelines of an internal stakeholders’ workshop in Abuja, the minister assured that although the government had not been making noise about all the efforts to crash LPG prices, it was deeply concerned about the increasing rates in the market.

The internal stakeholders at the event included: the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), the Nigerian National Petroleum Company Limited (NNPC), the Gas Aggregation Company of Nigeria (GACN), among others.

Ekpo stated that serious meetings were ongoing on the matter, including the current practice of selling gas in dollars, which has impacted prices, stating that Nigerians will begin to see changes soon.

He explained that government has demonstrated the will to ensure that prices of gas which have risen by up to 50 per cent in recent months, are reduced considerably by the recent withdrawal of all taxes and levies on importation of gas-related equipment.

Describing it as a big incentive, the minister, asked why the reduction was not reflecting in gas prices in the market, said it will take sometime for the policy to materialise.

“On the issue of LPG, we are interacting with the critical sectors to ensure that there is no exportation of LPG. All LPG produced within the country will have to be domesticated.

“And when this is done, the volume will increase and of course the price will automatically crash. I’m in contact with the regulator. Then we have meetings almost on daily basis, and then with the producers of the gas, like Mobil, Chevron and Shell. So there is the hope that things will turn around. We don’t need to make noise about it.

“And it is part of it that we are having this engagement, to know exactly what the problems are, so that we can address it once and for all,” Ekpo explained.

On excessive ‘dollarisation’ of gas prices, Ekpo equally stated that meetings were ongoing as a fallout of recommendations from the February 6 external stakeholders meeting, noting that all views were being collated for appropriate action.

On why prices were not falling despite removal of 7.5 Value Added Tax (VAT), he said: “It is not going to reflect that way. We are dealing with human beings. We have made a policy. And these people, the investors, they want to maximise the profit that they are going to get from it.

“ But at the end of the day, we have to come in. That is why you have the regulator, we are interfacing with them to make sure they crash the price. We are meeting with them on a daily basis”.

Earlier, he said the workshop was aimed at repositioning the Nigerian gas sector for optimal performance, and to unlock Nigeria’s abundant gas resources for economic development and poverty eradication.

Ekpo said it was his expectation that having heard from the operators in the industry, policymakers, regulators and policy implementers will internalise the feedback from stakeholders and customers to proffer workable solutions to tackle the issues.

“With over 208Tcf in proven gas reserves, Nigeria has no business with energy poverty, and it is imperative for us to rise up as a people to tackle these challenges head-on,” the minister stressed.

According to him, the theme of the workshop “Harnessing Nigeria’s Proven Gas Reserves for Economic Growth and Development” was very apt and provided a platform to galvanise action and take the necessary steps to release the nation’s abundant gas reserves.

Also giving an overview of the first meeting with external stakeholders, the Director of Gas in the ministry, Oluremi Komolafe, said during the last meeting, operators raised concerns over the non-recovery of $1.3 billion dollars owed to gas producers from gas supplied to the power sector.

In addition, she explained that the issue of inadequate infrastructure was identified as part of the problems hindering gas supply to numerous off takers, and end users nationwide.

The participants, she said, recommended the fast-tracking of the completion of key gas projects such as the OB 3 gas pipeline as well as enable the quick commencement of the Midstream Gas Infrastructure Fund (MGIF) to enable the funding of critical gas infrastructure projects.

Besides, Komolafe stated that stakeholders agreed on the need to improve gas network system transparency and volume allocation as well as optimising the network code.

Specifically, she pointed out that the Oil Producers’ Trade Section (OPTS) said the continuous changes in fiscal conditions always resulted in uncertainty, fiscal instability, and negative impact on portfolio value.

Emmanuel Addeh