Nigeria to explore opportunities in domestic gas market

Timothy Choji, Abuja

Nigeria is to unlock the opportunities from the use of Liquefied Petroleum Gas, LPG, especially for domestic use.

Vice President Osinbajo said this at the opening of a stakeholders’ workshop on domestic utilization of LPG in Abuja.

He said the missing link had been the lack of an enabling environment for adequate harnessing and utilization of the country’s gas resources and that the Buhari administration is poised to turn things around.

The Vice President however, lamented the low usage of LPG, also known as cooking gas, in Nigeria, while he disclosed that the Federal Government spent $1 billion on kerosene subsidy in the year 2015.

Professor Osinbajo explained that in spite of the fact that Nigeria’s total domestic LPG grew from a low of 50,000 to approximately 400,000 metric tons per annum in 2015 due to the Nigeria Liquefied Natural Gas’ NLNG intervention, Nigeria’s per capital consumption of 2.5 kilogram’s however, remains low compared to its peers in Africa.

“The low level of LPG consumption in Nigeria has resulted in heavy dependence on kerosene and firewood as primary domestic cooking fuels in majority of approximately 36 million Nigerian households. This reliance on kerosene and firewood has substantial economic effect.

Government has had to take in huge subsidies, with over $1 billion spent in 2015 on kerosene subsidy. A significantly high rate of deforestation continues to be recorded as over 95.76 million metric tons of firewood was used in 2015,” he said.

According to him, the low consumption of LPG was irrespective of the superior health, environment and energy costs of LPG over other competing fuels, such as kerosene.

Furthermore, the Vice President stated the huge importation of LPG for domestic consumption impacts negatively on the country’s foreign exchange outlay and also limits domestic supply of LPG.

The Vice President added that the product had considerable benefits, which include cost-effectiveness; better health benefits than firewood and kerosene, both of
which have been identified as the causes of more than 50 per cent of over 93,000 deaths.

He added that the Federal Government is considering a number of interventions in the gas industry that would among others lead to a significant reduction in the rate of deforestation and create millions of direct and indirect employment opportunities for Nigerians.

Committee

He announced that an inter-ministerial committee on the expansion of domestic LPG in Nigeria has been set up, with him as the Chairman, as part of this administration’s commitment to grow the domestic LPG industry.

“This committee would oversee the implementation of identified interventions under the domestic LPG expansion framework, starting with the conversion of additional four million households to LPG use as cooking fuels within two years, progressing to 10 million households over five years and eventually converting additional 21 million households over 15 years, by addressing the challenges inhibiting market penetration,” he said.

Also speaking, Minister of State for Petroleum Resources, Mr. Ibe Kachikwu, highlighted the need to culminate all the various gas and LPG policies with the regulatory framework that would boost the business environment.

He explained that a successful implementation of the intervention strategies would require an investment of up to $25.2 billion over the next couple of years, adding that the investment would be used in providing infrastructure among others.

Similarly, the Managing Director of Nigeria LNG, Mr. Tony Attah, stated that to unlock the potentials of the LPG industry, the Federal Government should intervene by removing fiscal and regulatory bottlenecks necessary for creation of a conducive business environment for private sector investment in all segments of the value chain.

According to him, “an aggressive and well-coordinated market expansion strategy should lead to the growth of the Nigerian LPG market at annual growth of up to 32 percent from the current level of 400,000 metric tons per anum, to over three million in five years.

The Ministries of Power, Environment, Industry, Trade and Investment were represented at the occasion by their Ministers of State.