May 20, 2024
LPG: How VAT, Forex, others impact Nigeria’s market — NLNG
– By Godswill Odiong

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By Eyo Nsima

The Nigeria LNG Limited, NLNG, has attributed the rising prices of Liquefied Petroleum Gas, popularly known as cooking gas to factors such as the Value Added Tax, VAT, and Foreign Exchange, Forex.

According to the company, “NLNG’s domestic LPG pricing is most competitive compared to all other alternatives (imported and domestic supply). However, it is important to note that several factors such as VAT, Forex, etc., impact the pricing of the product which is indexed to the international pricing model.”

In a statement obtained by The Daily, www.thedaily-ng.com, targeted at explaining the current market situation, the company, stated: “The price of LPG in the domestic market is dependent on several market factors, including the forces of demand and supply.

“On the supply side, NLNG plays a pivotal role in the Nigerian domestic LPG market in line with the commitment it made to help deepen the market. Recently, the Company increased the volume of its annual commitment to the market from 350,000 to 450,000 metric tons, which is about 100% of its Butane production. Butane gas is less volatile and is, therefore, suitable for cooking. In 2020 alone, NLNG supplied over 80% of its LPG sales (Butane/cooking gas) to the Nigerian market.

“By committing 100% of its Butane production, NLNG has prioritized the domestic market, thus realizing its domestic supply target safely.

“NLNG’s current maximum Butane production meets about 40% of domestic demand. The balance is supplied by other domestic producers or via imports. Therefore, NLNG’s production alone is not sufficient.

“In order to achieve its aspiration for the domestic supply, a dedicated 13,000 metric ton vessel, LPG Alfred Temile, delivers the product to the market through Lagos and Port Harcourt terminals. The vessel’s delivery to these terminals is occasionally hampered by challenges at the terminal, including storage capacity, terminal access, draft restrictions and prioritization of other products over LPG.”

It added: “NLNG’s drive towards deepening the domestic LPG market is pivotal in line with NLNG’s vision of helping to build a better Nigeria. The Company is optimistic that the eventual completion of its Train 7 Project will further deepen the domestic LPG market.”

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