KEY POINTS
- FG bans export of Nigeria-produced LPG to curtail rising domestic prices.
- That is, a domestic LPG pricing framework will be created within 90 days by the NMDPRA.
- Therefore, long term planned infrastructure development in order to boost the local supply of fuel and stabilize the prices.
In response to surging domestic prices, the Federal Government has announced ban on the export of Liquefied Petroleum Gas (LPG) produced in the country, effective November 1, 2024.
The Minister of State for Petroleum Resources (Gas), Ekperikpe Ekpo, made the decision as the cost of the commodity has gone up substantially, from between N1,100-N1,250 per kilogramme to between N1,425 and N1,525 per kilogramme, putting a lot of pressure on Nigerian households.
The economics of rising government LPG prices
The Nigerian National Petroleum Company Limited (NNPCL) and LPG producers have been directed to halt export to stabilize price.
Exports will continue to be permitted but those involved in completing such exports will have to import an equivalent volume at cost reflective prices.
The measure seeks to ensure the locally produced LPG is available to Nigerians at home at reasonable prices, rather than export to the international market where prices are higher.
The Nigerian Midstream Downstream Petroleum Regulatory Authority (NMDPRA) was also granted a 90 day window to work with industry stakeholders in developing a new domestic pricing framework.
The price of LPG will deviate from the current practice of being linked to external markets and be based on the cost of in – country production.
Long term strategies to increase domestic LPG supply
Over the long term, the government seeks to invest in blending, storage and distribution infrastructure for LPG. This development, to be rolled out over the next 12 months, is intended to abolish exports until local supply attains a level satisfactory to meet demand at prices it can be afforded.
These measures are put in place to save Nigerians from the economic burden of the continued price hike.
According to Vanguard, these steps are part of government action to ensure availability of LPG, enhance affordability and stop adding more burden on Nigerian consumers’ economy, Minister Ekpo said.
