—-as marketers warn it may hit N10,000 by December
The price of the 12.5 kilogramme of Liquefied Petroleum Gas,( LPG) or cooking gas, has continued to soar in an unprecedented manner as it has now hit N8,500 in many parts of the country.
This was despite the Federal Government’s plan to make the product appealing to the common man.
The government earlier this year launched the National Gas Expansion Programme,( NGEP,) to drive increased utilisation of gas as a better alternative for petroleum fuel for homes, industries and automobiles.
The 12kg of LPG sold for N7,000 in September and below N4,000 last year.
The high price of the product since about three months ago is caused by a supply gap following a drop in importation as the government imposed an import tax on cargo arriving in the country.
Of the 1.2 million metric tonnes, MT, of the product required for consumption in the country, the Nigeria LNG Limited, NLNG, supplies about 450,000MT while independent marketers supply 750,000MT through imports.
The Federal Government’s GEP was designed to make gas more attractive and accessible to the masses, thereby increasing its usage for cooking, transportation, and in industries.
However, despite this plan, prices of cooking gas have kept soaring in recent months, from about N3,500 last December to between N8,000 and N8,500 as at October, this month.
Investigations showed that the landing cost of the product has since skyrocketed as a result of a recent crisis in the foreign exchange market and the imposition of a new tax.
The Petroleum Products Pricing Regulatory Agency, (PPPRA), said out of the 85,264.80MT of LPG consumed in the country in August, 38,040.46MT were imported.
This puts the level of importation at 55.39 per cent versus 44.61 per cent supplied locally.
Further data showed that 21,606.30MT was imported from the United States, while 13,044.266 was imported from Algeria and 12,573.779MT was brought in from Equatorial Guinea.
Recent reports had marketers warning that the price of 12.5kg of the product could hit N10,000 by December if pending concerns were not addressed.
Marketers have debunked inflating prices, passing the buck of rising prices to the NLNG.
On the other hand, the NLNG claimed that marketers lacked enough infrastructure to take up its cooking gas supply, a claim also refuted by the marketers.
The Marketing Manager, NLNG, Austin Ogbogbo, had said: “NLNG has grown its capacity from 50,000 metric tonnes per annum to 450,000 metric tonnes per annum of LPG in the past 14 years.
“Nigeria needs 1.2 million metric tonnes per annum, but even the 450,000 we produce cannot be absorbed by the market’s current infrastructure.”
When asked if the NLNG’s position was true, the National Chairman, Liquefied Petroleum Gas Retailers Association of Nigeria, Michael Umudu, replied in the negative.
He said: “Marketers have the capacity to absorb the 1.2 million metric tonnes annually and this figure will continue to increase.
“Marketers have the capacity; rather, the challenges of the NLNG have to do with logistics. Many depots use to be empty for months; so, why should they say marketers don’t have capacity?”
According to Ubuntu, storage of cooking gas does not end in the midstream facilities, with inland facilities such as gas plants and retail outlets having more storage capacities.
“This is how it works: LPG is discharged in a depot, and LPG trucks are ready to load products to plants. From the plants, retailers refill their cylinders and store in their shops while end-users buy.
“This means that a depot of 5,000MT storage capacity can do a turnover of 15,000MT a month or even more. So, looking at the estimated 1.2 million MT yearly demand, it shows that if NLNG supplies only 100,000MT a month, then the 1.2 million MT target is met,” he said.
He added: “If the depot of 5,000MT storage capacity can do 15,000MT a month, then calculating other depots with even much more capacities and multiplying by three for a month turnover, you will realise that these depots would do up to 150,000MT monthly.
“And going by the 1.2 million MT annual consumption demand, we only consume about 100,000MT a month. So why should NLNG say there is not enough storage?”
The gas retailers’ chairman noted that the NLNG or any other supplier did not need to supply the annual need at once, adding that this was why he called for the improvement of logistics by the LPG producer.
“With respect to logistics, if they (NLNG) can adapt to compatible vessels and engage enough of the vessels, then more than 1.2 million MT annual estimate would be conveniently met,” Umudu added.
Reacting to the position of the marketers, the spokesperson of the NLNG, Eyono Fatayi-Williams, said the gas firm could only give 450,000MT at the moment to the domestic market.
She also observed that there were challenges with logistics, such as the delay of vessels at the Lagos port, but stressed that the NLNG was doing its best to deliver its part in the supply of cooking gas.
She explained that in 2007, Nigeria could only produce 50,000MT of LPG and that the NLNG was asked to intervene, stressing that the gas firm was primarily set up for export.
“Between 2007 and now, because we have guaranteed supply, the market has grown. Today, Nigeria can take over one million tonnes of cooking gas,” Fatayi-William said.
She added: “The maximum production we have of cooking gas is 450,000 metric tonnes annually and the market did over a million metric tonnes last year.
“Also, when we talk about logistics, the maximum amount we can now give, which is the maximum production volume, is less than what the entire country needs. We are not the only producer of LPG but we can only give 450,000MT.”
CBN succumbs to pressure, extends use of old naira notes to February 10
Up till Saturday, CBN had insisted on the 31st January deadline for the validity of the old N200, N500 and N1,000 despite overwhelming complaints that the notes are either not available or in short supply in the banks or their Automated Teller Machines.
Last October, Emefiele announced the Naira redesign policy which entails the issuance of new notes to replace the existing N200, N500 and N1,000 series.
CBN reverses itself on cash withdrawal limits as Emefiele succumbs to pressure
—now pegs weekly withdrawal for individual to N500,000, Corporate N5million
The Eyewitness Reporter
The Central Bank of Nigeria(CBN) may have succumbed to pressure from the National Assembly and other rich Nigerians as it has reversed itself on its earlier cash withdrawal limits for individuals and corporate organisations.
In a circular number BSD/DIR/PUB/LAB/015/073 dated December 21st, 2022 and addressed to all Deposit Money Banks(DMBS) and other financial institutions, the apex bank disclosed that the new weekly cash withdrawal limits for both the individuals and corporate organisations have now been reviewed to N500,000 and N5million respectively.
The new weekly cash withdrawal limits now superseded the earlier one released on December 6th, 2022 which were put at N100,000 for individuals and N500,000 for corporate organisations.
In the new revised cash withdrawal limits, the CBN claimed the revision of the policy was in response to feedback from the stakeholders.
The new revised policy also slashed the processing fees for amounts above the approved threshold from an initial 5 percent for individuals to 3 percent and for corporate organisations from 10 percent to 5 percent.
The circular, which was signed by Haruna Mustafa, the Director of Banking supervision, the CBN said the new revised cash withdrawal policy takes effect from January, 9th,2022.
”Following our circular BSD/DIR/PUB/LAB/015/069 dated December 6, 2022, on the above subject and based on feedback received from stakeholders, the Central Bank Of Nigeria(CBN) hereby makes the following reviews;
–the maximum weekly limit for cash withdrawal across all channels by individuals and corporate organisations shall be N500,000 and N5 million respectively.
–In compelling circumstances where cash withdrawal above the limits in (1) above is required for legitimate purposes, such requests shall be subject to a processing fee of 3 percent and 5 percent for individuals and corporate organisations respectively.
–Futrher to (2) above, the financial institution shall obtain the following information from the Customer, at the minimum,and upload same on the CBN portal created for the purpose
a. Valid means of identification of the payee(National ID, International passport, or driver’s license)
b.Bank Verification Number(BVN) of the payee.
c.Tax Identification Number(TIN) of both the payee and the payer.
d. Approval in writing by the MD/CEO of the financial institution authorising the withdrawal.
–Third-party cheques above N100,000 shall not be eligible for payment over the counter, while the extant limit of N10 million on clearing cheques still subsists.
—Monthly returns on cash withdrawal transactions above the specified limits should be rendered to the banking supervision, Other financial institution supervision and Payment System Management Departments as applicable
—Compliance with extant AML/CFT regulations relating to KYC, ongoing customer due diligence, currency and suspicious transaction reporting, etc is mandatory in all circumstances.
—Customers should be encouraged to use alternative channels(internet banking, mobile banking apps, USSD, cards/POS, eNaira,gets) to conduct their banking transactions”, the circular reads.
The CBN however warned all the banks and OFIS that aiding and abetting the circumvention of this policy will attract severe sanctions.
It could be recalled that the policy, which was first announced on December 6th, 2022, generated mixed reactions, especially from the members of the National Assembly who invited the CBN Governor. Godwin Emefiele to come and explain the rationale behind the cash withdrawal limits.
Twice, the National Assembly invited Mr. Emefiele, but twice, he did not appear, citing national assignment engagement as the reason for his non-appearance.
The review may, however, be as a result of the intense pressure that the CBN governor has lately been subjected to as a result of this policy which analysts believed does not favour the elites, the politicians and the rich Nigerians, especially giving the forthcoming elections.
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