While Nigerians presently face terrible financial pains emanating from skyrocketing price of cooking gas, huge volume of the commodity is being flared on daily basis. Executive Secretary, National Association of LPG Marketers, Bassey Essien, in this no-holds-bared interview opens up on the gas crisis rocking Nigeria. Is there any hope? Here below is the tough answer he provides at the Platforms Africa e-Discourse. Excerpts.
The Nigerian Government has nicknamed this decade as the decade of gas. As a stakeholder, what is your view about this?
Evidences abound that Nigeria is highly endowed with abundant natural gas reserve. The Federal Government’s decision to declare the decade of gas is to drive the zeal to monetise the country’s gas resources that will ensure the development of our natural gas into playing a major role in the country’s energy transition.
With the declaration, the Federal Government has set out to make gas a priority energy source for the country and a major catalyst of our industrial revolution.
The decade of gas revolution will indeed go down as a watershed in Nigeria’s giant strides to develop sustainable economic and infrastructural base capable of making it more competitive in an emerging global order.
The declaration will allow for the Nigerian gas master plan to be strategically considered, reviewed towards achieving a comprehensive domestic gas market development roadmap that could move the nation into getting maximum value from the use of its abundant gas resources for supply of energy (power generation, transportation fuel, domestic use at homes and power for Industry) in addition to the provision of feedstock for several Industries (fertilisers, plastics, petrochemical, textile, paint industries among others.
What contributions can the country’s gas resources make to curtail the borrowing spree by the government? Can gas be a money-spinner like oil?
There is still high demand for gas all over the world. At the current state we are now there is global demand for gas hence the current spike in international price, which is even affecting the demand in the country. Our huge natural gas deposit can be harnessed into major revenue earning income stream for the country. Rather than export the gas in its crude form, refining and processing will produce other additives as feedstock for petrochemical industries. These will generate enough revenue for the country and save us the embarrassment of perpetual borrowing.
Many have said country’s gas sector has not attracted enough of its desired investments. Do you agree with this? if so, Why?
Yes it is true. The enabling environment is not conducive for investors to invest in the sector. For example many licenses have been granted for modular refineries, how many of them have taken off. The country is still a major culprit in gas flaring and yet knowing the potentials in processing these into viable exports have not been encouraged. There should be adequate incentives, tax holidays that will attract the needed investors into the sector.
Despite its huge gas resources, Nigeria is still faced with cooking gas crisis. The price has skyrocketed in recent past. What is truly responsible for this?
The problem with the cooking gas crises is largely due to inadequate supply. The demand has outstrip supply. Current statistics show that out of the over 1.2milllion Metric tons consumed in the country, 40% of these is sourced locally while the balance 60% is imported.
The devaluation of the Naira, the high international price (sales are benchmarked at the international price, even locally produced gas). All these factor account for the high price.
The now to be introduced 7.5% VAT and payment of customs duties on cooking gas which had been removed since now makes the imported gas to be expensive and the high cost of importation will have to be passed onto consumers.
What is your group doing about this?
The Association is very concerned with the high cost as many Nigerians are resorting to the use of firewood, charcoal and kerosene to cook and the prices of these cooking energy have suddenly gone up.
The Association is interfacing with Government, Stakeholders, producers, importers to see how the situation can be arrested, as well as meeting with the Marketers vide moral suasion not to capitalize on the situation and inflict more pains on citizens by increasing the cost of gas in their locations though they are equally expending huge cost to have cooking gas at their locations.
Some have said the situation, if not addressed in time, could push the price to N1000 per 12.5kg. What will you say about this?
That is our fear and what we are trying to avoid. Early in the year a 20metric ton of gas was selling for below N5m but today same tonnage sell for N10.2m.
As long as there is that supply shortage, the available quantity and the dynamics of supply-demand will keep pushing the price higher. If government does not address the recently introduced import charges and VAT, the price of cooking gas may as well reach N10,000 for a 12.5kg cylinder. Today the price has risen to N7,500 and N8,000.
Any hope in sight about the surging price?
Unfortunately none in sight for now except the supply is increased. NLNG says it has supplied all its production quota into the market and other available sources in-country are still negligible to address the shortfall in supply.
The Standard Organization of Nigeria (SON) has said that substandard Cylinders are in the market. And, we are aware of efforts by your group to fight this. Who can be blamed?
The cost of cylinders has been on the gradual rise over the years. We have about 2 cylinder manufacturing plants in the country and all the elements of production are imported, note the import implications.
The cylinder ownership structure in the country ensures that owners are in charge of their cylinders. Cylinders expire on the 15th year of usage from the manufacturing date. Because of the high replacement cost, consumers buy what they can afford. This has equally encouraged the proliferation of substandard cylinders in circulation.
Despite the over 180million population of the country, we hardly have up to 10million cylinders in circulation.
The regulators are working hard to monitor the standard of cylinders coming into the country.
The progress in cylinder acquisition still needs government input to ensure that the cost of materials for cylinder production get the necessary exemption from duties but however the state of our local currency still remains a major problem.
What is the way out?
When the decade of Gas declaration was made, the government had targets but if these targets must be met, there must be seriousness on the part of government to ensure these targets are actualized.
The import duties on gas and VAT are totally ill-timed and very retrogressive at this stage.We have mentioned several times that the government should come out with a policy that will compel all local production to be Channeled into the domestic market first. Until you are sufficient in production, you cannot just discourage imports and cause the attendant hardship that is prevalent now. The focus on the targets of the decade of gas must not be derailed.
Does Nigeria flare excess gas from the rigs?
The flaring is still on going. NLNG says their existence has reduced flaring from 62% to 25%. These are gases could have been collected and processed accordingly.
The investment in this sector l understand is enormous but it can be attained if investors are given enough incentives to invest in the sector.
You mentioned as regards to the rising cost of cooking gas that there is no hope in sight as per arresting the trend and that is quite worrisome because it seems Nigerians are condemned to return to the era of charcoal and firewood in in distant time. But my question has to do with the concluding part of your submission where you said other available sources. Can you explain more in this? Who are the other sources and what are the forces limiting them from addressing the shortfall from NLNG?
Exxon Mobil, Chevron, OSO produce gas, regardless of their quantities, let’s feed the local market first. NLNG says their maximum production of butane is 450,000MT which they have dedicated to the local market. Train 7 upon completion in 4 yrs time will only add additional 100,000MT.
You said your group is having dialogue with the govt on the crisis. Don’t you think your dialogue focused more on survival of the industry players rather than the fact that the Nigerian public is fast receding into the dark age of use of firewood and charcoal?
The dialogue is not about survival of the industry players but we are concerned about going back to those cooking energy we classify as dirty fuel because of their health and climatic implications and also for the fact that all the positive results the government has made in the use of cooking gas will be eroded if the situation is not addressed. So it’s not about survival of industry players but making a mockery of all the efforts done since 2005 till date with the encouragement of the populace to convert to use of gas and now that they have obliged, the gas is not longer within their reach. No one will take the government serious in future.
Essien,. Executive Secretary, NALPGAM provided these insights when he led the e-discourse organized by Platforms Africa, an e-community of intellectuals, policy moulders and opinion leaders in Africa
