In a decisive move aimed at controlling the surging prices of Liquefied Petroleum Gas (LPG), commonly referred to as cooking gas, the federal government has mandated domestic producers to halt all exports of the commodity. This action is part of a broader strategy to mitigate the economic strain on Nigerian consumers grappling with increasingly high gas prices.
Government’s Directive and Immediate Action
During a stakeholders’ meeting held in Abuja on Tuesday, Minister of State for Petroleum Resources (Gas), Ekperikpe Ekpo, announced that effective November 1, 2024, the Nigerian National Petroleum Company Limited (NNPCL) and local LPG producers are required to stop exporting domestically produced LPG. Instead, they must import equivalent volumes of LPG exported at prices that reflect actual production costs. This measure seeks to ensure that the domestic market is prioritized, thereby alleviating the financial burden on consumers who have seen prices rise steadily.
“The short-term solution requires that all LPG produced within Nigeria remain in the domestic market to meet local demand,” Ekpo stated. The minister emphasized that this intervention is crucial for addressing the skyrocketing prices that have negatively impacted the lives of ordinary Nigerians.
Engagement with Stakeholders for Pricing Framework
In light of the rising costs, Ekpo tasked the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) with developing a new pricing framework in collaboration with industry stakeholders. This framework is expected to be finalized within the next 90 days. The objective is to establish a pricing model that is anchored in the cost of local production rather than international market fluctuations, which have historically led to inflated consumer prices.
The minister’s statement highlighted a critical observation: “It is unjust that Nigerians pay significantly higher prices for LPG produced within their own country while international markets dictate the costs.” By aligning the pricing structure with local production costs, the government aims to provide relief to consumers and stabilize the market.
Long-Term Solutions for Market Stability
Beyond the immediate export ban, the government is also looking at long-term solutions to ensure the sustainable supply of LPG in Nigeria. In a statement released after the meeting, it was noted that plans are underway to develop blending, storage, and distribution facilities for LPG within the next 12 months. This initiative will help fortify the domestic market by ensuring that supply meets demand, ultimately stabilizing prices and reducing reliance on external markets.
Concern Over Rising Prices
Minister Ekpo expressed deep concern regarding the continuous rise in LPG prices, which have recently soared from an average of N1,100 to N1,500 per kilogram. This alarming increase has prompted heightened scrutiny and calls for immediate government intervention. The minister’s initiatives are part of a comprehensive approach to addressing the inherent challenges within the LPG sector, which is critical for many Nigerian households that depend on cooking gas as an essential fuel source.
In November 2023, Ekpo established a high-level committee, led by NMDPRA Chief Executive Farouk Ahmed, to explore viable solutions to the challenges within the LPG value chain. This committee includes key stakeholders from various segments of the industry, emphasizing the collaborative effort needed to stabilize prices and ensure access to affordable cooking gas for all Nigerians.
A Path Towards Affordable Cooking Gas
Despite previous initiatives, fluctuations in LPG prices have continued to pose significant challenges for consumers. The latest government directive is seen as a critical step toward addressing these persistent issues and ensuring that Nigerians can access affordable cooking gas. As the NMDPRA works on the new pricing framework and the government pushes for infrastructure development, stakeholders remain hopeful that these measures will yield positive results in the coming months.
By prioritizing domestic production and engaging with industry players, the government aims to create a more resilient LPG market that not only meets the needs of consumers but also harnesses the country’s natural resources effectively. As the situation evolves, many will be watching closely to see how these changes impact the affordability and availability of cooking gas across Nigeria.
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