Nigeria’s LPG Market Can Grow 32% in Five Years – NLNG

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Tony Attah, MD, NLNG

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The Nigeria Liquefied Natural Gas says the market share of liquefied petroleum gas in the country can increase by 32 percent within five years

A SURVEY conducted by the Nigeria Liquefied Natural Gas, NLNG, Limited has shown that given the right conditions, the Liquefied Petroleum Gas, LPG, market in Nigeria can penetrate and grow its market share by 32 percent from 400,000 metric tonnes per annum, MTPA, to three million MTPA within five years.

At the LPG stakeholders meeting recently, Tony Attah, managing director, NLNG, stated that the study by the company also projected that within the five year period, the country can improve her per capita consumption of LPG from approximately two kilogramme (kg) to 12kg. Nigeria’s LPG per capita consumption is the lowest in Africa and increased adoption of LPG can yield a lot of socio-economic benefits to the country.

The NLNG has taken up the drive to improve LPG usage in Nigeria but its efforts needed to be complemented by certain government actions to ensure the market peaks in line with the market estimate its study revealed.

“It is expected that an aggressive and well-coordinated market expansion strategy should lead to the growth of the Nigerian LPG market at annual rates of up to 32 percent from the current level of over 400,000 MTPA to over three million MTPA in five years with a potential increase in per capita consumption from approximately 2kg to over 12kg, well above the sub-saharan average of 3.5kp per capita.

“There are still other bottlenecks beyond our control which frustrates the full-fledged development of the market including the dearth of investments in LPG reception facilities and supply infrastructure, throughput challenges, as well as onerous fiscal regime and regulatory environment, such as the imposition of VAT on LPG produced in the country while the volumes imported are granted VAT waivers; all these continue to hinder overall step change growth in the industry.”

According to Attah, unlocking the potentials of the industry will require a public-private sector partnership. “The government needs to intervene by removing fiscal and regulatory bottlenecks necessary for creation of a conducive business environment for private sector investment in all segments of the value chain.

“The removal of VAT on LPG as well as taxes and duties concessions for LPG equipment and cylinders must be at the top of the priority list for the government. On the other hand, the private sector must deepen the market to create efficiency and provide quality services at lower costs whilst ensuring that highest safety standard are adhered to across the entire value chain especially in LPG plant operations, transportation and cylinder quality/recertification.”

Attah had on Tuesday, October 11, said the assets of the company now worth more than $13 billion. According to him, the NLNG Act provides incentives, assurances and guarantees, which significantly encourage investment in the project.

“These incentives made it attractive for the international investors and financiers to invest even during a period Nigeria were perceived to be a pariah state. Those investments grew and they resulted in an inspirational Nigerian success story that the company is today, with assets now worth over $13billion.”

Commenting on attempts by certain stakeholders to undermine the NLNG Act, he said the courts had been firm on the provisions of the Act in instances where court cases were instituted by third parties to compel the company to pay levies. “These attempts are apparently continuing outside the courts, but we are hopeful that the country’s leadership will protect its commitment through the Act as well as avoid the portrayal of the country as one that does not honour agreements.”

The NLNG has been able to generate $85 billion in revenue, pay $5.5 billion in taxes as well as commit more than $200 million to corporate social responsibility projects, especially in capacity building and infrastructure development.

—  Dec 19, 2016 @ 01:00 GMT

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