In recent years, Liquefied Petroleum Gas (LPG) has gained popularity among Nigerian households as a cleaner energy source, replacing firewood and kerosene for cooking. However, despite being a major natural gas producer, Nigeria faces high LPG prices, which strain household budgets and hamper the government’s push for gas adoption under its “Decade of Gas” initiative. This article explores why LPG remains expensive in 2024, details current price ranges across Nigerian cities, examines the government’s gas policies, and offers insights into LPG consumption trends relative to Nigeria’s large population.
LPG Prices Across Nigerian Cities in 2024
As of 2024, the price of LPG varies across Nigeria, with notable increases observed over the past year. On average, LPG prices are in the range of ₦900 to ₦1,100 per kilogram in cities like Lagos, Abuja, and Port Harcourt. For a 12.5 kg cylinder, commonly used in Nigerian households, prices range from ₦11,250 to ₦13,750. Prices may be even higher in rural areas where distribution costs add further expense. Compared to previous years, this marks a continued rise, partly attributed to currency depreciation, global market shifts, and infrastructural challenges.
Why Is LPG So Expensive in Nigeria in 2024?
Despite Nigeria’s natural gas resources, the country’s LPG market faces several structural and economic challenges, resulting in high prices.
1. High Dependence on LPG Imports
Nigeria continues to rely heavily on imported LPG, which makes up about 60-70% of the country’s LPG supply. While Nigeria has abundant natural gas reserves, it lacks sufficient processing and storage facilities to meet the full domestic demand. The reliance on imports exposes Nigeria to global price volatility and currency fluctuations. With the naira’s depreciation in 2024, importing LPG has become costlier, increasing retail prices for consumers.
2. Limited Domestic Infrastructure
Nigeria’s domestic LPG production infrastructure is limited, with existing facilities unable to meet the growing demand. Although the Nigerian Liquefied Natural Gas (NLNG) company produces and supplies a portion of LPG locally, production falls short of demand. Expanding domestic production requires substantial investment in processing plants, pipelines, and storage facilities. The Nigerian government has identified this need under the Decade of Gas initiative, but actual infrastructure development has been slow, further driving up costs.
3. Distribution and Supply Chain Challenges
The LPG supply chain in Nigeria remains inefficient, with challenges in transporting LPG from ports and processing plants to remote regions. The cost of moving LPG across Nigeria, especially to the north and other underserved areas, adds to the price, making LPG unaffordable for many households. Additionally, limited storage and bottling plants across the country further strain the distribution process, impacting availability and driving up prices.
4. High Regulatory Costs
The Nigerian government has made strides to encourage LPG use, yet taxes, import duties, and regulatory fees continue to increase costs for importers and distributors. While efforts are being made to remove VAT on LPG to reduce costs, other levies on imports remain. For instance, marketing costs, import fees, and value-added tax (VAT) still apply to portions of the LPG supply chain, raising the cost for end consumers. Reducing or streamlining these fees would be key to making LPG more affordable.
Government Policies on Gas in 2024: A Drive for LPG Adoption
The current administration, led by President Bola Ahmed Tinubu, continues to promote gas as a key energy source under the Decade of Gas initiative, which aims to establish Nigeria as a leading gas-powered economy by 2030. This policy supports using natural gas in various sectors, from power generation and cooking fuel to industrial applications. The goal is to transition Nigeria from petrol-based fuels to cleaner, more affordable options like LPG and CNG (Compressed Natural Gas).
Under the Decade of Gas policy, the government has prioritised:
- Expanding LPG Production: The Nigerian government is encouraging private investment in LPG production facilities to reduce import dependency. Collaborations with the Nigerian National Petroleum Corporation (NNPC) aim to increase domestic LPG supply, stabilise prices, and make LPG more accessible to Nigerian households.
- Developing Infrastructure: Significant focus is placed on building and upgrading gas processing plants, storage facilities, and pipelines across Nigeria. Investments in storage tanks and distribution centres are expected to streamline the supply chain, lower distribution costs, and bring down consumer prices in remote areas.
- Reducing Taxes and Fees: The Nigerian government is working to reduce VAT and other taxes on LPG to reduce costs for consumers. Advocacy by industry groups like the Nigerian Association of Liquefied Petroleum Gas Marketers (NALPGAM) has emphasised the need to reduce regulatory fees and simplify import processes.
While these policies are promising, effective implementation and increased investment are critical for success. Achieving these goals requires strong collaboration between the government, private investors, and industry stakeholders.
LPG Consumption Rates in Nigeria and Population Insights
As of 2024, Nigeria consumes about 1.2 million metric tonnes of LPG annually. While consumption has grown over the past decade, it remains relatively low compared to the country’s population of over 200 million. Approximately 45% of Nigerian households use LPG for cooking, with many rural and low-income families still relying on alternatives like firewood, charcoal, or kerosene due to affordability and accessibility issues.
Comparatively, Nigeria’s LPG adoption rate is low for a country with abundant natural gas resources. To meet national energy goals and reduce reliance on less sustainable fuels, the government must address high LPG prices and limited accessibility. Expanding access and reducing costs will be key to increasing LPG usage and achieving broader energy transition goals.
The Way Forward: Addressing High LPG Prices and Boosting Accessibility
To make LPG affordable and accessible to more Nigerians, several steps are needed:
- Boost Domestic LPG Production: Nigeria must continue to invest in LPG processing plants and infrastructure to increase domestic supply. By reducing dependence on imports, Nigeria can shield itself from international price fluctuations, bringing stability to the local LPG market.
- Streamline Distribution: Developing a comprehensive LPG distribution network across Nigeria will help reduce supply chain bottlenecks. New storage and bottling plants across the country, particularly in rural and northern areas, will lower distribution costs and improve access to affordable LPG.
- Reduce Taxes and Levies: Lowering import duties, VAT, and other levies on LPG will help make it more affordable. Policy changes that reduce regulatory burdens on importers and distributors will ultimately benefit consumers and encourage more Nigerians to switch to LPG.
- Enhance Policy Implementation: Government agencies must work together to implement the Decade of Gas policies effectively. Public-private partnerships and strategic investments will be crucial for expanding infrastructure and making LPG accessible in all regions of Nigeria.
- Public Awareness and Education: The government should launch awareness campaigns to promote the benefits of LPG as a safe and affordable energy source. Educating the public about LPG’s long-term cost-effectiveness and environmental benefits will encourage adoption.
In 2024, LPG remains expensive in Nigeria due to a combination of factors, including reliance on imports, limited infrastructure, and high distribution costs. However, the current administration’s commitment to the Decade of Gas initiative and policies aimed at expanding LPG production and reducing costs signal hope for more affordable LPG in the near future.
As Nigeria progresses with its gas adoption strategy, it must address the challenges in production, distribution, and pricing to make LPG accessible and affordable for all. By investing in infrastructure and implementing policies that support affordable energy, Nigeria can improve LPG adoption rates and ease the financial burden on millions of households, advancing toward a more sustainable energy future.
