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Next week will see an increase in the price of cooking gas, according to marketers

Aug 11, 2023 | International | 0 comments

Marketers have warned petrol users that prices will rise next week.

Olatunbosun Oladapo, president of the Nigerian Association of Liquefied Petroleum Gas Marketers, warned gas users to expect price spikes next week.

He blamed increasing international costs, high tax rates and vessel prices, currency shortages, and naira devaluation for the pricing review.

That begins next week due to rising foreign pricing. Vessel costs and taxes are high, but consumers need to earn more.

They’re spending less. Everyone’s sobbing. Since business is low, consumers, intermediaries, and retailers are affected,” he added.

Olatunbosun lamented the price increase.

Price increases are regrettable. He said that Nigerian customers are struggling because they can’t afford petrol.

He said customers are cooking with firewood, charcoal, and sawdust again.

“The government should provide palliatives and lower taxes and levies to help the populace.

“For every 1kg of petrol purchased at N700, tax will take N3.50. How much business is left?” he added.

As people weren’t buying petrol, he suggested taxing profit instead.

“Local taxes are compounding the problem,” he added, urging marketers who could purchase locally to set pricing with “consumers’ sympathy” in mind.

The PUNCH said that vessel shortages in the international market would raise local cooking gas costs.

Charter rates have increased ahead of the 2023 winter when heating fuel demand increases.

According to Spark Commodities statistics reported by Bloomberg, charter prices quadrupled from $70,500/day to $284,750/day for November and $206,750/day for October on August 1, 2023.

Tanker supplies are tightening because traders are utilizing ships as floating storage to wager that LNG prices will climb as the weather gets colder.

Variable shipping rates may eat away margin for an LNG trader hoping to cash in on higher winter prices, and increased transportation costs eventually can imply higher pricing for European and Asian consumers.’

In late July, 42 LNG tankers were followed, up 27% from a year earlier.

International prices impact Nigerian LPG prices, benchmarked against Nigerian Liquefied Natural Gas Contract rates.

The NLNG CP, like other globally traded commodities, may fluctuate at least once to three times, owing to market dynamics.

The local currency’s weakening would affect LPG prices domestically.

The Central Bank of Nigeria reported N749.62 for the dollar on Wednesday.

Nigerian LNG supplies local cooking gas to off-takers at the exchange rate.

On July 28 and August 7, Apapa’s main LPG depots sold 20 metric tonnes for N10.7m and 11m.

Cooking petrol costs have been low for months owing to worldwide price drops.

Due to the currency depreciation, LPG prices declined from N730/kg in June to N600/kg in July and N750/kg in August.

According to the U.S. Energy Information Administration, the price plummeted 76.1 per cent to 2.10 per million British Thermal Units on May 31 from 8.78 per million BTU in June.

According to the National Bureau of Statistics, the average retail price for refilling a 5kg cooking gas cylinder dropped 6.71 per cent from N4,360.69 in May to N4,068.26 in June.

In June 2022, it was N4,218.38, down 3.56 per cent.

Kwara had the highest average price for refilling a 5kg cylinder, followed by Niger and Zamfara.

Ondo had the lowest price at N3,287.86, followed by Ekiti at N3,288.46 and Nasarawa at N3,364.62.

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