FG Moves to Slash LPG Prices, Halts Exportation

In a bid to curb the rising cost of Liquefied Petroleum Gas (LPG), commonly known as cooking gas, the Federal Government has announced new measures aimed at stabilizing prices and ensuring domestic supply. The Minister of State for Petroleum Resources (Gas), Rt. Hon. Ekperikpe Ekpo, voiced his concern over the ongoing surge in LPG prices, which has led to significant financial strain on Nigerians.

In a previous effort to address the situation, the Minister established a high-level committee in November 2023. The committee, headed by Mr. Farouk Ahmed, the Authority Chief Executive of the Nigerian Midstream Downstream Petroleum Regulatory Authority (NMDPRA), included key stakeholders from the LPG value chain. Despite these efforts, LPG prices have continued to fluctuate, recently spiking to N1,500 per kilogram from an average of N1,100 – N1,250 per kg.

During a meeting held in Abuja on Tuesday, Ekpo met with stakeholders to tackle the soaring prices and the resulting hardship faced by Nigerians. The Minister announced a series of directives designed to provide both immediate and long-term solutions:

• Short-Term Measure: Effective from November 1, 2024, the Nigerian National Petroleum Company Limited (NNPCL) and LPG producers are directed to cease the exportation of LPG produced domestically. Alternatively, they must import an equivalent volume at cost-reflective prices.
• Pricing Framework: Within 90 days, the NMDPRA will work with stakeholders to develop a new domestic pricing framework. This framework will base prices on the cost of in-country production, moving away from the current practice of referencing external markets like the Americas and Far East Asia, which has led to higher prices for Nigerians.
• Long-Term Solution: Over the next 12 months, new facilities will be built to blend, store, and distribute LPG within the country. Exportation will be halted until the local market achieves sufficient supply and price stability.

The Minister emphasized that these measures are intended to boost the availability of LPG and shield Nigerians from the economic challenges posed by high cooking gas prices. “The new measures aim to improve availability and ensure affordability to protect Nigerians from the economic hardship caused by the LPG price hike,” he stated.

The directives signal a decisive effort by the Federal Government to ensure that Nigerians benefit from the country’s natural resources, as they work to stabilize the market and ease the burden on consumers.

Source: Business Standard