Liquefied Petroleum Gas (LPG or domestic cooking gas) has been described as clean source of cooking fuel but Nigeria trails peers in its adoption and use on the back of poor infrastructure and minimal adherence to global safety standards.
Africa’s most populous nation consumed little above 1 kilogramme (kg) per capita, which is comparatively less its West African peers, such as, 4kg per capita in Ghana and 9kg per capita in Senegal according to data obtained from the World Liquefied Petroleum Gas Association.
With urbanisation, LPG consumption is growing. Business Day’s Research and Intelligence Unit’s survey of Lagos local government areas shows, overall, 54 percent of respondents made use of gas, 29 percent used kerosene, 13 percent applied electric cookers and 3 percent relied on charcoal for cooking fuel.
Interestingly, Nigeria is a net exporter of domestic cooking gas in Africa, however, poor infrastructure and minimal adherence to global standards in the handling of products is stalling the growth of retail segment of the LPG value chain.
“LPG bulk transportation could be very profitable, except for the very bad state of Nigerian roads. There is good reason to believe LPG retail segment could be consistently profitable, but then contingent on many factors, including degree of adherence to globally accepted best safety practices” Nuhu Yakubu, the president of the Nigeria Liquefied Petroleum Gas Association (NLPGA) said in an interview.
Currently, Lagos is the primary LPG distribution point in a country of 923, 768km2 and located in the extreme southern regions of Nigeria. The challenge is that the Lagos port is highly congested and unable to effectively serve as the major distribution point for the entire country.
Opening up other distribution points in parts of the country as well as developing transportation modes to other discharge points will lead to the advancement of the domestic LPG (DLPG) market.
Nigeria produces over 2 million metric tonnes of LPG per annum (MTPA) but consumes 600, 000 mtpa. LP Gas is the least utilised of the four major cooking fuels – firewood, kerosene, charcoal and gas.
Nigeria LNG Limited, a liquefied natural gas producing company and liquefied natural gas plant on Bonny Island, estimates that Nigeria spends over $1billion per annum on kerosene subsidy and face increasing environmental challenges with continuous deforestation as over 50 percent of households still rely on firewood as cooking fuel.
Despite big improvements in the domestic LPG market, work still needs to be done to free up the market because the fundamentals are right: over 180 million people, a potential big middle class and rapid urbanisation.
In 2007, LPG road tankers were less than 100, but at the end of third quarter of 2017, it was in excess of 1000. There is a significant growth across the entire LPG value chain as with the demand also. LPG demand by 2007 was 70,000 metric tons per annum and has risen to over 600,000 metric tons as at end of 2017.
On safety in handling the product to minimise incidences of explosions, Yakubu said, “LPG has been on the upward demand and there will be more demand for LPG this year and if something is not done about it proactively as we want to envisage, maybe more occurrences will happen. We want to carry along all the stakeholders in our activities including the press for proper reportage so the public will be aware of what to do or look out for.”
Players in LPG subsector are putting measures in place to grow the LPG market to $10 billion in the next five years.