A 6% increase in the price at which Nigeria LNG Ltd's liquefied petroleum gas offtakers sell on to LPG marketers in the country will scupper the government's plans to significantly increase domestic consumption of LPG, the Nigerian Association of LPG Marketers said Tuesday.
NLNG, which produces around 5 million mt/year of LPG from its six-train Bonny LNG plant, provides 250,000 mt/year of the output for the domestic market through 18 companies known as offtakers.
NLNG officials said the company had not increased the price at which it sells LPG to the offtakers.
"The offtakers are creating unnecessary scarcity and have increased the price to Naira 3.5 million [$22,000] per 20 mt, which is not in line with the aspiration of the Federal Government to encourage LPG usage," the Nigerian Association of LPG Marketers said in a statement.
"We know that the [international market] price of crude oil, which is one of the parameters used by NLNG to determine the domestic price of gas, has not increased. So our members nationwide are demanding an explanation as to what led to it," it added.
NLNG has struggled to dispose of the entire 250,000 mt/year volume reserved for the domestic market, with the offtakers only lifting a total 132,213 mt of LPG in 2013.
LPG is a major source of cooking energy for Nigeria's middle class.
However, high tariffs on gas equipment and materials and the continued government subsidy on kerosene have impaired the growth of LPG consumption in Nigeria, which is among the lowest LPG consuming states in sub-Saharan Africa.
Nigerian National Petroleum Corp. said in February the government was pushing to increase domestic supply and consumption of LPG in country to 500,000 mt/year by the end of 2014, in a bid to cut down on the use of kerosene as a cooking fuel. Kerosene is mostly imported and is heavily subsidized by the government.
