Still on the High Side

Fri, Jul 26, 2013
By publisher
4 MIN READ

Oil & Gas

Consumers of cooking gas still groan under the soaring prices of the product even after a court resolution of the tax dispute between the NIMASA and the NLNG

By Anayo Ezugwu  |  Aug. 5, 2013 @ 01:00 GMT

DESPITE the resolution of the tax-induced row between the Nigerian Maritime Administration and Safety Agency, NIMASA and the Nigeria Liquefied Natural Gas Limited, NLNG, by a Lagos Federal High Court, the price of Liquefied Petroleum Gas, LPG, otherwise known as cooking gas, remains high. The price has increased by about 16.6 percent at most retail outlets in Lagos State.

Investigations by Realnews in Lagos metropolis, revealed that the 12.5kg gas cylinder, which hitherto sold for between N2,500 and N2,800 now goes for over N4,000 and may hit N7,000 soon if government fails to intervene. Gas dealers, who spoke with Realnews, said the product has remained scarce for about a month, stressing that the price might go beyond the current level if the scarcity persisted. Ifeanyi Edeh, a major gas dealer in Ojo, said all his supply channels had run out of stock. “We thought the row between these two bodies will be resolved in a short while but it actually took weeks. Now, all major gas dealers have run out of stock. It’s a serious matter and the price is increasing almost every day. The effect of the resolution of the tax war is yet to be felt,” he said.

Michael Umudu, national president, Liquefied Petroleum Gas Retailers Association of Nigeria, said that cooking gas retailers in the state “are adjusting their prices by N500, and I can confirm to you that over 80 per cent of retailers in Lagos have started readjusting their prices. You know people like to take advantage of such a situation in Nigeria.”

Basil Ogbuanu, president, NLNG, said that the cause of the increase in the price was because most of the gas plant owners who have the products had exhausted what was in stock. He explained that this was because the companies lifting LPG from NLNG known as Club of Off-takers, were fast running out of stock of the product. Ogbuanu also called on the federal government to intervene and reconcile the two giants to save Nigerians the hardship that scarcity of LPG would cause.

Patrick Akpobolokemi, DG, NIMASA
Patrick Akpobolokemi, DG, NIMASA

A source in NIMASA said the NLNG has started shipping cooking gas to Lagos, but the product had not been discharged as a result of logistics challenge. “The vessel, MT Providence, which left Bonny plant arrived here on Monday after the resolution of the dispute. Unfortunately, it could not discharge immediately at the North Oil Jetty, NOJ, because of lack of space. We are hoping that the vessel will berth to discharge LNG next week so that consumers will be able to make use of the product,” he said.

Realnews gathered that for the past three weeks, NIMASA did not allow NLNG cargoes to export gas. Before the dispute arose, NLNG was exporting a cargo daily to its customers.  Each cargo costs between $25 million and $30 million, and in the three weeks that the quarrel lasted, NLNG lost at least 21 cargoes of gas. The development is coming as NLNG has agreed to pay the sum of $140 million in disputed levies to NIMASA, to end the three-week blockade of shipments from its export terminal.

In the meantime, NLNG and NIMASA have agreed to revoke the detention order for the NLNG. But the revocation will be subject to the NLNG making the agreed payments. The NLNG owes the NIMASA a total $158million, out of which the firm has paid $20million.

Following the seizure of its cargoes, NLNG on June 28, declared a force majeure, a legal clause allowing it to miss shipments, as the blockade lingered and more than 20 LNG tankers moored outside the Bonny Island loading bay. The company, in which the Nigerian National Petroleum Corporation, NNPC, owns majority stake on behalf of the federal government, disagreed with NIMASA’s interpretation of its tax obligations, citing exemptions in the law establishing it.

But the maritime agency insisted that the tax breaks expired in 2004, leaving the gas producer with many years of tax arrears. The NLNG is jointly owned by the NNPC, ENI International, Shell Gas and Total.

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