Why cooking gas prices are rising – Marketers

According to the Nigerian Association of Liquefied Petroleum Gas Marketers (NALPGAM), the recent surge in cooking gas prices is a result of a combination of factors, primarily stemming from supply disruptions and market opportunism.¹

The main reasons cited by marketers and the Nigerian National Petroleum Company Limited (NNPC) include:

• PENGASSAN Strike: The recent industrial action by the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) at the Dangote Refinery caused a temporary halt in loading and distribution.² This created an “artificial” scarcity and a backlog of supply, which directly impacted prices.³
• Supply Chain Disruptions: Even before the strike, the Dangote Refinery, a major local supplier of cooking gas, had undergone maintenance, which slowed down truck loading and forced marketers to turn to other depots.⁴ When the strike began, it further disrupted the discharge of vessels and inspections at depots, exacerbating the supply shortage.
• Market Exploitation: The Nigerian Association of Liquefied Petroleum Gas Marketers (NALPGAM) and the NNPC have accused some opportunistic retailers and middlemen of taking advantage of the supply gaps to hike prices.⁵ They claim that while the ex-depot prices may not have officially increased, some retailers are selling at inflated rates to maximize profit.⁶

The National Bureau of Statistics (NBS) also reports a general upward trend in cooking gas prices over the past year. As of August 2024, the average retail price for a 12.5kg cylinder increased by about 69% year-on-year.⁷ Factors contributing to this long-term trend include:

• Naira Depreciation: Nigeria’s reliance on imported gas, even with increased local production, makes the price of cooking gas highly susceptible to the devaluation of the naira.⁸
• Inflation: The general high rate of inflation in the country also puts upward pressure on the price of commodities like cooking gas.⁹
• Increased Demand: National consumption of Liquefied Petroleum Gas (LPG) has been steadily increasing, putting more strain on the supply chain.

The marketers and NNPC have expressed hope that as the supply chain stabilizes and operations return to normal following the resolution of the strike, prices will ease in the coming weeks.¹⁰ They advise consumers to buy directly from registered gas plants to avoid inflated prices from middlemen.