Marketers predict an upcoming increase in the price of cooking gas next week
Challenging days loom for gas consumers, with marketers indicating an imminent price increase in the upcoming week.
Olatunbosun Oladapo, the President of the Nigerian Association of Liquefied Petroleum Gas Marketers, warned that gas consumers should prepare for higher prices beginning next week.
He attributed the planned price adjustment to escalating international prices, elevated tax rates, vessel costs, forex scarcity, and the devaluation of the naira.
Oladapo stated, "This shift is set to commence next week due to the surge in international prices, elevated vessel expenses, and the burden of high taxes, all while consumers' earnings remain stagnant."
"Their ability to purchase has diminished. There's widespread distress. Consumers, intermediaries, and retailers are all grappling with the consequences as business activity dwindles," he remarked.
Olatunbosun expressed his disappointment regarding the impending price rise.
"This scenario is truly regrettable as prices are on an upward trajectory. Nigerian consumers are currently facing severe hardships as they struggle to afford gas," he further lamented.
The shortage of vessels in the global market has triggered increases in charter rates, in anticipation of the upcoming 2023 winter, which sees a surge in demand for heating fuel.
Starting from August 1, 2023, the rates for chartering vessels soared to $284,750 per day for November and $206,750 per day for October, marking a fourfold increase from the current rate of $70,500 per day. These figures were extracted from data provided by Spark Commodities and reported by Bloomberg.
The growing scarcity of tankers is attributed to traders employing these ships as floating storage, as they speculate on the ascent of LNG prices with the approach of colder weather.
"Fluctuating shipping rates have the potential to erode profit margins for LNG traders aiming to capitalize on elevated winter prices, and the upward trajectory of transportation costs can eventually translate into increased costs for purchasers in both Europe and Asia."
In late July, the count of LNG vessels remaining afloat for a minimum of 20 days also escalated, with 42 vessels being monitored—representing a roughly 27 percent surge compared to the same period in the previous year.
Nigerian LPG prices are determined on the international stage using the Nigerian Liquefied Natural Gas Contract prices, and these prices consistently bear the influence of global pricing trends.
Similar to other commodities traded internationally, which undergo price oscillations due to market dynamics, adjustments to the NLNG CP (Nigerian Liquefied Natural Gas Contract prices) are possible and can occur either upwards or downwards, ranging from at least once to up to three times.
Furthermore, the devaluation of the local currency could also impact the domestic LPG price.
Between July 28 and August 7, the prices for 20 metric tonnes of LPG at major depots in Apapa, Lagos ranged from N10.7 million to 11 million.
For several months now, local cooking gas consumers have been benefiting from reduced prices attributed to a decline in international prices.
In June, the LPG price experienced a decrease from an average of N730 per kilogram to approximately N600/kg in July, before rising to N750/kg in August due to the devaluation of the naira.
During June, the price underwent a substantial 76.1 percent decrease, reaching 2.10 per one million British Thermal Units on May 31 from the previous 8.78 per one million BTU, according to the U.S. Energy Information Administration.
A National Bureau of Statistics report on retail gas prices indicated that the average cost of refilling a 5kg cooking gas cylinder witnessed a 6.71 percent monthly decrease, dropping from N4,360.69 recorded in May to N4,068.26 in June.
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