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By Adewale Sanyaolu
Support for local refineries, including the Dangote Refinery to boost domestic gas production has been identified as the panacea to crash the rising cost of Liquefied Petroleum Gas(LPG), popularly called cooking gas, the Managing Director/CEO of NIPCO Plc, Mr. Suresh Kumar, has said.
Kumar disclosed this at the recently held National Conference of the Nigerian Association of Liquefied Petroleum Gas Marketers (NALPGAM) 2024, with the theme “Sustainable Energy Growth in Nigeria – LPG and the Future,” which was held in Lagos over the weekend.
“It is crucial for the government to back these refineries in their efforts to significantly increase LPG output. This will drive down retail prices and make the product more accessible to Nigerians,”.
This was as he reaffirmed the company’s commitment to driving sustainable energy growth through Liquefied Petroleum Gas (LPG) and Compressed Natural Gas (CNG).
The NIPCO MD expressed optimism that prices would decline as domestic production improves.
He maintained that, with the Dangote Refinery and other refineries now sourcing crude oil in local currency, the volume of LPG produced locally is expected to increase, which will, in turn, drive down the price of the commodity.
“There is hope that the reliance on imported LPG will decrease, which will positively influence the prices at which the product is sold domestically. Greater local production will make LPG more affordable since it reduces exposure to foreign exchange fluctuations and international pricing dynamics,”.
Kumar acknowledged that demand for LPG in Nigeria has been relatively stagnant due to the high cost of the product.
“The current high prices have limited consumption growth, but this situation is only temporary. With more players entering the gas processing sector, we anticipate a market correction soon,”.
In the long term, the NIPCO MD expressed confidence that the market would stabilize.
“We believe that with increased competition and expanded production, the market will find a balance,” he said.
He expressed optimism for more growth opportunities in the LPG market with the administration of President Bola Ahmed Tinubu’s giant strides, especially with the current fiscal measures aimed at addressing final product cost in the sector.
According to him, the optics are good for the affordable cost of the product if all the measures being put in place come to fruition and basic raw materials for cylinder production which including steel are addressed frontally to attain lower cost of the material which is a key component in the use of LPG for domestic cooking.
He stressed that NIPCO Plc, which has been operational since 2004, initially entered the industry as a marketer of white products (petroleum fuels).
He, however, emphasised that the company’s long-term vision has always been to become a leader in the marketing and distribution of LPG.
“Our strategy was driven by the fact that Nigeria has over 200 trillion cubic feet of gas reserves.
We believe that the country’s gas consumption must be optimised through the promotion of both LPG for domestic use and CNG for industrial and transportation sectors,”.
He further emphasised the company’s investments in infrastructure, noting that NIPCO has expanded its LPG operations significantly over the years.
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“In 2008, we invested in an LPG facility in Apapa with a capacity of 5,000 metric tons. Today, that same facility has grown to over 20,000 metric tons, thanks to strategic partnerships with our subsidiaries.
We have also deployed LPG tankers and established multiple stations across Nigeria to ensure easy access to cooking gas for households nationwide,”.
He further explained that while LPG is essential for homes, CNG will play a key role in powering industries and transforming the transportation sector.
“We are committed to aligning with Nigeria’s energy goals by promoting sustainable fuel options that leverage our vast natural gas resources.
He stated further that, at the time NIPCO entered the market, Nigeria’s domestic LPG consumption was around 50,000 metric tonnes (MT) annually.
However, he said, the past 16 to 17 years have been a remarkable journey, stressing that, as at today, the market has grown from 50,000 MT to approximately 1.5 million MT per year.
Despite the growth, the MD pointed out that significant potential remains untapped.
“We believe that less than 60 per cent of Nigeria’s 200 million population has embraced the use of LPG,’’.
This, he pointed out, highlights the immense opportunities within the market and underscores the need for more investments in gas processing, storage, and marketing to serve the larger population.
“Our vision is to harness these opportunities and grow the country’s LPG consumption from 1.5 million MT to levels more appropriate for a population of over 200 million people.
We must work with the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) and other stakeholders to end gas flaring in the country,’’.
According to him, substantial investments are needed to capture and process flared gas to increase domestic supply beyond the current 1.5 million MT to at least 5 million MT annually.
The MD revealed that local production of LPG remains inadequate, saying currently, less than 40 per cent of the 1.5 million MT consumed domestically is produced locally.
“This is why the government must encourage companies like Chevron to convert more of their propane output into butane, which is more suitable for domestic use.
He posited that boosting local production would attract further investments in pipelines, storage, and bottling facilities, as well as expand retail outlets and LPG depots across Nigeria.
“Our latest assessments show that the existing downstream infrastructure is capable of handling up to 5 million MT annually.
This means we are ready to accommodate increased production from both associated and non-associated gas fields within the country,”.
He urged the government to introduce incentives to encourage investments in gas processing, arguing that, the key to unlocking the full potential of Nigeria’s gas resources lies in incentivizing investors to venture into gas processing.
