BY FESTUS OKOROMADU
The price of cooking gas, also known as Liquefied Petroleum Gas, has climbed to a record high of N1,200/kg in October as against N750/kg in August.
This represents an increase of 60 percent.
The spike in gas prices is largely due to local and global market factors.
These include the weak Naira (which has crossed the N1,000/$ benchmark at the parallel market last week), limited bulk storage capacity, stockpiling by importers capitalizing on the local scarcity of the commodity, as well as high demand for the product.
But most importantly, the spike in international LNG prices by 56 percent in the last two months is seen as the main factor which contributed to the increase in cooking gas prices in Nigeria.
Speaking to the situation, market analyst at Financial Derivatives Limited, said, “Cooking gas is a crucial source of energy for cooking and heating in many Nigerian households. Sadly, this surge in prices at a time when consumers are squeezed will only worsen the cost-of-living crisis. Higher cooking gas prices will exacerbate inflationary pressures in the near term.
“More so, rising gas prices can lead to energy poverty, where lower income households may be forced to switch to cheaper but less efficient cooking methods, such as firewood or kerosene stoves. These alternatives are often less safe and can contribute to indoor air pollution and respiratory problems.
“Worse, the domestic price of cooking gas is not expected to taper anytime soon due to lingering forex scarcity, the naira’s devaluation, and the persistent scarcity of vessels to bring the commodity from the international market to Nigeria.
“The vessel scarcity has driven up chartering costs, with vessel rental prices surging from $50,000 per day in August to $70,500 per day in September.
Transporting this commodity to Nigeria takes approximately 20 days, amounting to about $1.41 million per vessel. Statistics from Spark Commodities cited by Bloomberg indicate that vessel rental rates will further escalate to $206,750 per day later this month and to $284,750 per day in November.”
