Consumers of gas are in for harder times because marketers have suggested that prices would increase the next week.
Gas consumers should prepare for price increases starting the following week, according to Olatunbosun Oladapo, president of the Nigerian Association of Liquefied Petroleum Gas Marketers.
He listed several factors for the anticipated pricing review, including rising global prices, high tax rates and shipping costs, a lack of foreign exchange, and a depreciating naira.
“It will begin the next week due of an increase in foreign costs. Taxes are expensive and ship prices have increased, but consumer income has not increased.
“Their ability to purchase has decreased. Everyone is in tears. Because business is currently on the slow side, consumers, middlemen, and retailers are experiencing the effects, he said.
Olatunbosun characterized the impending price increase as regrettable.
“The terrible part of the problem is that prices are rising. Consumers in Nigeria are going through a very terrible time because they can’t afford gas, he continued.
He claims that consumers are again moving back to using sawdust, charcoal, and firewood for cooking.
“The government should intervene to ease the suffering of the populace by supplying painkillers and lowering taxes and levies.
“You may estimate that tax will cost N3.50 for every 1 kilogram of gas that costs N700. How much of such a firm is still in existence?” he said.
He claimed that “local taxes are exacerbating the issue” and urged marketers who offered local people the chance to purchase their goods to set pricing with “consumers’ sympathy” in mind.
His response followed The Press’s revelation that rising vessel shortages on the global market will increase local costs for liquefied natural gas, often known as cooking gas, in the upcoming months.
Prior to the 2023 winter, when demand for heating fuel peaks, charter rates have increased due to a shortage of vessels on the global market.
According to data from Spark Commodities cited by Bloomberg, charter prices will increase to $284,750 per day for November and $206,750 per day for October as of August 1, 2023, quadrupling the current price of $70,500 per day.
Because traders are betting that LNG prices will climb as the weather gets colder, tanker supplies are becoming increasingly scarce.Rising transportation costs may ultimately result in higher pricing for consumers in Europe and Asia. Volatile shipping rates might eat into an LNG trader’s profit margin as they attempt to profit from higher winter prices.
With 42 vessels observed in late July, which is around 27% more than at the same time last year, there were more LNG vessels lying on the water for at least 20 days as well.
Nigerian Liquefied Petroleum Gas (LPG) prices are always influenced by worldwide prices and are benchmarked against them based on Nigerian Liquefied Natural Gas Contract pricing.
And like other commodities that are traded worldwide.
The domestic price of LPG would be impacted by the local currency’s depreciation.
According to the Central Bank of Nigeria, on Wednesday, one dollar was equivalent to N749.62.
On the basis of the current exchange rate, Nigerian LNG typically sells the cooking gas it generates locally to off-takers.
Between July 28 and August 7, the cost of 20 metric tonnes of LPG at the major depots in Apapa, Lagos, ranged between N10.7m and N11m.
Due to a decline in international pricing, local consumers of cooking gas have been enjoying inexpensive costs for a few months now.
Due to the depreciation of the naira, the cost of LPG climbed from an average of N730 per kilogram in June to roughly N600/kg in July and N750/kg in August.
According to the U.S. Energy Information Administration, the price was down by 76.1% as of June, from 8.78 per million BTU on May 31 to 2.10 per million BTU.
The average retail price to refill a 5 kilogram cylinder of cooking gas declined by 6.71 percent month over month from N4,360.69 recorded in May to N4,068.26 in June, according to a National Bureau of Statistics data on retail gas pricing.
It dropped from N4,218.38 in June 2022 by 3.56 percent on an annual basis.
According to state profile analysis, Zamfara had the highest average price of N4,683.33, followed by Niger with N4,691.16, and Kwara with N4,750.00 for refueling a 5kg cylinder.
On the other hand, Ondo recorded the lowest price with N3,287.86, followed by Ekiti and Nasarawa with N3,288.46 and N3,364.62, respectively.