Alhaji Aliko Dangote, chairman of the Dangote Group, has announced plans to reduce the price of Liquefied Petroleum Gas, also known as cooking gas. He promised to start direct sales of the cooking gas to consumers should the existing distributors fail to allow the price crash.
However, operators in the sector have kicked against the plan, saying the businessman was planning to monopolise the LPG sector. They protested the move on Monday, as the dealers expressed fear over possible monopoly.
During a recent tour of his refinery by a group of local and foreign guests, Dangote said the current price of cooking gas is expensive and not affordable for the common people who depend on firewood for cooking.
He revealed that the refinery now produces 2,000 tonnes of LPG daily and it is ramping up production for distribution into the Nigerian market, especially as Nigerians increasing demand use of gas for cooking.
Dangote said to members of the Lagos Business School CGEO Africa, at the refinery in Lekki, that “the one that we didn’t write, which you must have seen, is LPG. Currently, we do LPG of about 2,000 tonnes per day. You know Nigeria is gradually moving to the usage of LPG. But I believe it is expensive, but right now we’re trying to bring down the price and make it cheaper.”
Dangote cautioned that “if the distributors are not trying to bring it down, we’ll go directly and sell to the consumers, so that people will now transit from firewood or kerosene to LPG for cooking.”
Recall that Umpire News reported earlier that Dangote plans to start the direct distribution of petrol, diesel, and aviation fuel to marketers nationwide in August. Dangote already procured 4,000 CNG-powered trucks for the exercise.
Currently, the price of cooking has oscillates between N1,000 and N1,300 per kilogramme. Dangote said this would be further reduced to ensure affordability by most Nigerians.
Operators in the LPG sector do not take kindly the recent move by Dangote to reduce cost of the product for common people. The former Chairman of the LPG and Natural Gas Downstream Group of the Lagos Chamber of Commerce and Industry, Godwin Okoduwa, in an interview, described Dangote’s plan as monopolistic.
Okoduwa warned that the Dangote should understand the fact that some investors grew the market from 70,000 metric tonnes in 2007 to over 1 million metric tonnes in 2022. He said collaboration is the way to go.
“I think it’s monopolistic. I think a market should be protected to encourage growth. The LPG industry in Nigeria grew from 70,000 metric tonnes in 2007 to over 1.3 million tonnes in 2022. That was done by collaboration — collaboration with the Federal Government, the NLNG, and offtakers. Everything was done in collaboration. It grew from 70,000 to 250 to 800, and now over a million,” Okoduwa said.
He emphasised that growth cannot be achieved through a monopoly but through collaboration. “Today, we are just under 5kg or 6kg per capita consumption in terms of LPG. Other countries are doing much more. South Africa is doing double digits, Morocco and Tunisia are doing double digits. We can do much more.
“So, we should, as an industry and as a country, focus on how to grow the LPG industry and not allow someone (to frustrate the players). Yes, he has invested; yes, it’s a capital economy, but he should not be allowed to frustrate the players.
“There are people who have spent money, spent resources, even business and development, and someone just comes in to reap from the work that has been done. I’m sure he wouldn’t have built if there had not been an existing market. The work has been done, he should respect the market and let us grow. It shouldn’t be a zero-sum strategy. It should be collaborative,” he said.
The LPG industry expert, in his suggestion, noted that although Dangote has the upper hand, he should embrace collaboration.
“My advice to him is that the pie can be bigger. The Nigerian market is about 1.3 million tonnes. The Nigerian LPG market can be 5 million tonnes. He should work towards collaboration rather than competition, because at the end of the day, everybody benefits,” he said.
Okoduwa further said if truly Dangote’s primary motive is to reduce price of cooking gas to a rate where everybody can afford it then he should take hi business to Northeast. He said, “I have news for him. He should go to the Northeast, where you have the least consumption of LPG. He should go to the Northeast and start developing the LPG infrastructure there. I think we will tell him thank you for that.”
In same vein, the Executive Secretary/Chief Executive Officer, Nigerian Association of Liquefied Petroleum Gas Marketers, Bassey Essien, expressed skepticism over the possibility of Dangote selling gas directly to consumers, at a cheaper price.
“I am saying that it’s unrealistic. What is the position with PMS? Has the refinery been able to sell petrol directly to you and me into our cars at a very cheap rate?” Essien asked.
