The federal government says it is difficult to bring the price of cooking gas down as the product is not subsidised by the government and its price is determined by international market forces.
The Minister of State for Petroleum Resources, Timipre Sylva, said this Tuesday evening in response to rapidly rising prices of cooking gas that has seen more Nigerians seek other energy sources. He said the government will nonetheless “tinker” with some aspects of gas pricing within its control.
According to the International Energy Agency (IEA), the recent steep rise in European gas prices has been driven by a combination of a strong recovery in demand and tighter-than-expected supply, as well as a particularly cold and long heating season in Europe last winter, and lower-than-usual availability of wind energy.
The prices of cooking gas in Nigeria have more than doubled in the last year with many Nigerians switching to firewood and charcoal.
Speaking with journalists at the presidential villa, Abuja, after a meeting with President Muhammadu Buhari, Mr. Sylva said cooking gas is a deregulated commodity and therefore not subsidised. He also said VAT charges on liquefied petroleum gas (LPG) imports is also a contributory factor.
“So the price of cooking gas is not determined by the government or by anybody in the industry. In fact, gas prices are determined internationally,” he said.
“And you all are aware that in Europe, today, gas prices have gone up; there was even a crisis in Europe relating to gas prices. So the pricing of gas internationally now also affects the price of gas in the country.
“Apart from that there are some issues around VAT charges on imported gas, and of course, taxes on imported gas, which we are handling.
“But of course, quite frankly, these taxes on imported gas, you must also juxtapose it side by side with the local producers of gas. So if you incentivize the importation too much, then you will also kill the local industry.
“And also, you don’t want to incentivize the local industry at the expense of the imports, because if you incentivize the local industry at the expense of the imports, then you will not have enough gas produced within the country. So these are the issues of balancing that the midstream and downstream regulatory authorities are handling and I want to assure you that we are quite concerned.”
According to him, President Buhari is also very concerned and aware that the price of gas is high in the market, and “we’re doing everything trying to see how we can bring down the price of gas especially as we approach the yuletide”.
Asked whether the government will address the situation soon as the yuletide season approaches, the minister insisted that there is little the government can do.
“Well, as I said, this is a commodity, whose price is not determined by us. If you tell us, for example, that crude oil prices are high, there’s nothing we can do about it because crude oil prices are not determined in Nigeria.
“We also, like you, check for what the price of crude oil is for today because it is not determined here. In the same vein, when we see gas prices going up, gas prices are not also determined in Nigeria, just like you, we are also checking what the price of gas is in the international market. But of course, there are some elements of the pricing that we can tinker with.
“And I can assure you that we are doing everything to ensure that those elements’ pricing will be adjusted on our side so that at least it will amount to some reduction. But I will not give you a time or date when that will be achieved. We know that the Yuletide is already upon us but we will see how we can at least make it bearable for Nigerians before then.”