The Nigerian Association of Liquefied Petroleum Gas Marketers (NALPGAM) has expressed its unequivocal support for the Dangote Petroleum Refinery’s initiative to reduce the price of cooking gas, a move aligned with the association’s long-standing advocacy for greater affordability of LPG, particularly for low-income households. NALPGAM President, Oladapo Olatunbosun, affirmed this position, highlighting the potential of lower gas prices to significantly reduce the reliance on firewood for cooking, a practice with detrimental environmental and health consequences. This development follows recent remarks by Aliko Dangote, President of the Dangote Group, during a refinery tour where he expressed concerns about the current high price of cooking gas and its inaccessibility to many Nigerians, forcing them to continue using firewood. Dangote indicated a willingness to directly engage with consumers, bypassing distributors if necessary, to ensure lower prices and facilitate a widespread transition from firewood and kerosene to LPG.
Dangote’s commitment to lowering LPG prices resonates deeply with NALPGAM’s own mission, which has consistently advocated for price reductions to expand gas accessibility to the poorest segments of the Nigerian population. Olatunbosun emphasized that NALPGAM’s advocacy efforts, including presentations to government officials like the Minister and the Special Adviser to the President on Energy, have focused on the need for affordable gas to displace the prevalent use of firewood among low-income households. He interprets Dangote’s commitment as a direct response to these advocacy efforts and a reflection of Dangote’s own pro-poor stance. The prospect of significantly lower gas prices, while welcomed by NALPGAM, has understandably generated apprehension among some gas operators who have made substantial investments in storage facilities.
Recognizing the potential disruption within the industry, Olatunbosun acknowledged the concerns of operators who may fear the impact of lower prices on their investments. Many operators financed their storage facilities through long-term loans, some with repayment periods extending up to 20 years, and have yet to recoup a significant portion of their investment. A drastic price reduction could therefore jeopardize their business viability and raise concerns about loan repayment. However, Olatunbosun expressed confidence in the market’s capacity to accommodate all stakeholders, emphasizing the potential for market dynamics to adjust and create opportunities for existing operators. He reiterated that the overarching goal of price reduction is universally supported within the industry, and the focus should be on adapting business strategies to the changing market landscape.
Clarifying the concept of “direct sales” proposed by Dangote, Olatunbosun explained that it does not entail Dangote directly selling to individual households or consumers queuing at the refinery with their cylinders. Rather, it involves streamlining the distribution chain by directly supplying gas to retail marketers and gas plant owners, thereby eliminating or reducing the role of intermediaries. This strategy aims to address the price inflation caused by multiple layers of middlemen in the current distribution system. By bypassing these intermediaries, Dangote intends to significantly lower the cost of gas and make it more affordable for end consumers. This direct-to-retailer approach would streamline the supply chain and ensure greater price control, ultimately benefiting consumers.
The high cost of cooking gas, currently around N1,000 per kilogramme, renders it inaccessible to a significant portion of the Nigerian population, particularly those in rural areas. Olatunbosun stressed the urgency of making gas affordable for low-income households to expand gas utilization nationwide. He emphasized that the current gas usage is predominantly concentrated among the affluent and middle-class segments of society, leaving a vast majority reliant on less efficient and environmentally damaging fuel sources like firewood. Lowering the price of gas, therefore, is crucial for increasing its accessibility to the poor and promoting a nationwide transition to cleaner and more sustainable energy sources.
NALPGAM’s plea to Dangote, as the largest LPG producer in Nigeria, centers on leveraging the company’s market position to prioritize affordability and expand access to clean cooking fuel. The association believes that Dangote’s commitment to social responsibility, coupled with its market dominance, makes it uniquely positioned to drive this transformative change in the Nigerian energy landscape. By absorbing a portion of its profit margin and significantly reducing the price of gas, Dangote can facilitate a wider adoption of LPG, particularly among the poor, and contribute to both environmental sustainability and improved public health. This move would not only benefit millions of Nigerians but also align with the broader national goals of sustainable development and improved quality of life.
