Dangote Announces Plan To Reduce Price Of Cooking Gas, Marketers Kick

The President of the Dangote Group,Aliko Dangote, has announced plans to reduce the soaring price of Liquefied Petroleum Gas (LPG), commonly known as cooking gas, in the country.

Naija News reports that he warned that if distributors fail to comply, his refinery may begin direct sales to end-users to reduce the cost.

This move, however, has triggered anxiety among existing market operators who view it as a step toward monopolising the LPG sector.

Speaking during a recent visit by members of the Lagos Business School CGEO Africa to his Lekki refinery, Dangote described the current cooking gas price as prohibitive for ordinary Nigerians, many of whom rely on firewood or kerosene for daily cooking.

Dangote stated, “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.

“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.”

He disclosed that the refinery currently produces 22,000 tonnes of LPG daily, with plans to scale distribution into the local market.

But not everyone in the sector shares Dangote’s enthusiasm. Several operators have expressed concerns that the billionaire’s latest move could destabilise the LPG ecosystem that has been built over the years.

The former Chairman of the LPG and Natural Gas Downstream Group at the Lagos Chamber of Commerce and Industry, Godwin Okoduwa, in an interview with Punch, said the plan reeks of monopolistic intent.

He cautioned, “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.”

He emphasised that growth cannot be achieved through a monopoly, but rather through collaboration. He said, “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.”

In his recommendation, the gas expert stated that although Dangote has the upper hand, he should consider embracing collaboration.

He added, “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.”

Told that Dangote’s major concern is to bring the price of cooking gas to a rate where everybody can afford it and stop cooking with firewood, Okoduwa retorted, “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.”

Also reacting, the Executive Secretary/CEO of the Nigerian Association of Liquefied Petroleum Gas Marketers, Bassey Essien, dismissed Dangote’s proposal as “unrealistic.”

He said, “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?”