As an ardent advocate of the Decade of Gas, the Gas Aggregation Company Nigeria (“GACN”) attended a summit on Thursday, 23rd June, and Friday, 24th June 2022 at Balmoral Convention Centre, Federal Palace Hotel Lagos hosted by the Gas Academy and the Nigeria LPG Association (NLPGA) with the theme “ENERGISING THE FUTURE: LPG AS A SUSTAINABLE FUEL IN AFRICAN ECONOMIES”.
To further deepen GACN’s Gas penetration and commercialization in the domestic market, the conference offered valuable insights into the LPG market while highlighting the key challenges in the sector. GACN also had the chance to network with LPG experts across the value chain.
Furthermore, Nigeria with an average annual growth rate of more than 20% over the past 10 years, has one of the fastest growing LPG markets and is also one of the largest markets for new LPG cylinders and equipment. Industry players, financiers, stakeholders, and a host of others graced the event while giving a brainstorming session, in particular experts made presentations as such:
Mr. Nuhu Yakubu, President of the Nigerian LPG Association and MD Banner Energy Ltd specified that (NLPGA) LPG penetration will rise from the current 7.5 cylinders per year to 10 million cylinders per year.
The Deputy Managing Director of NLNG, Mr. Lekan Ogunleye stated that NLNG is a great supplier of the Decades of Gas. Until the advent of NLNG, the Nigerian LPG market was mainly supplied by refinery production and imports. He added, that in 2007, NLNG commenced LPG allocation for the domestic market supply with 50,000MT/annum, and in 2008, it increased to 150,000MT/annum. Since then, there has been a steady increase in NLNG’s LPG allocation to the domestic market. As of 2020, NLNG supplied about 40% (450,000mt) of its LPG production to the domestic markets and has now decided to supply 100% of its LPG production to the Nigerian market, reducing LPG exports. He further stated that NLNG is committing 89.2b to the development of the Bonny Road linking to the plant and that NLNG is making financial commitments for the renovation of 3 jetties in Nigeria. He however acknowledged the challenges facing the LPG Industry in Nigeria:
- Industry-inadequate infrastructure.
- A lack of storage facilities.
- Limited local production capacity.
- Mismatches in the demand and supply for LPG.
The Chairman of the Natural Gas Expansion Program (NGEP) Dr. M.M Ibrahim emphasized that NGEP was established to help better the utilization of gas and its development in the domestic market, with the major objective to expand gas supply by utilizing all the assets and resources, adding that Nigeria should be classified as an Oil and Gas Exporting Nation as we export 42% of gas through NLNG.
The CEO of National Petroleum Authority (NPA) Ghana, Dr. Mustapha Abdulhamid gave a brief that Ghana started using LPG in 1990. He went further to add that there has been a steady movement to promote gas penetration by the Federal Government.
The rise of LPG in Ghana, according to him prompted its neighbors from Burkina Faso and Mali to come to Ghana for LPG offtake but the promotion of LPG came with additional risks of explosion and the Federal Government banned all future expansions in the LPG market due to a recent explosion in 2017, which resulted in the LPG penetration in Ghana to stall considerably.
Engineer Simbi k. Wabote the Executive Secretary of NCDMB; also had this to say that NCDMB has a goal to develop strategies for organic penetration to make Energy Sources available, accessible, acceptable, and affordable before 2030.
The event was graced by the former President of Nigeria, Chief Olusegun Aremu Obasanjo who gave a keynote speech about the policy he initiated in 2005 during his tenure which states in a nutshell that the international oil companies and gas producers in Nigeria, rather than export all the gas should commit a certain volume to the domestic market. It was on the premise of this policy that the Domestic Gas Supply Obligation (DSO) was implemented.
Chief Olusegun Aremu Obasanjo also encouraged other Oil and Gas majors to remain committed and look at how to develop the local liquefied petroleum gas sector as a way of showing appreciation to a country in which they have benefited enormously.
Notwithstanding, there are some major challenges in the Nigerian LPG markets:
- Inconsistencies in regulations and their interpretations across states.
- Infrastructure deficit,
- Limited and inadequate LPG receiving terminals and storage in Nigeria.
- Stakeholders are not enlightened about major interventions that are ongoing.
- Unavailability of raw materials for the production of cylinders.
- Multiple taxation and changes including transportation levies.
- This causes the price of LPG to go up and will be borne by the end users.
- Capacity building.
Hence, GACN in its pursuit of business partnership and collaboration always leverages opportunities like this to foster and strengthen its commercial assurances for a stronger agreement, understanding, and engagement.