Nigeria’s recent Liquefied Petroleum Gas (LPG) export ban, which took effect on November 1, 2024, is intended to stabilize cooking gas prices across the country. The ban mandates that domestic LPG producers, including the Nigerian National Petroleum Company Limited (NNPCL), cease exports or import equivalent volumes to meet local demand. According to the Minister of State for Petroleum Resources (Gas), Ekperikpe Ekpo, the Nigeria Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) will establish a new pricing framework within 90 days, aimed at reducing the country’s dependence on volatile global LPG prices.
Despite the government’s optimism, industry experts are skeptical about the immediate impact of the ban on cooking gas prices. Lanre Bayewu, the Executive Secretary of the Nigerian Liquefied and Compressed Gases Association, pointed out several economic barriers that could limit the effectiveness of the policy. “While the export ban may slightly increase domestic supply, it will not significantly lower prices without addressing deeper issues such as the dollar-based prices of LPG, the depreciating naira, and ongoing inflationary pressures,” Bayewu explained.
Bayewu further stressed that structural challenges like high production costs, foreign currency licensing fees, and infrastructure gaps in transportation and distribution continue to drive up cooking gas prices. These systemic problems, he believes, will prevent any immediate or substantial reductions in cooking gas costs despite the export ban. The local LPG market in Nigeria, which has been experiencing rapid growth, has seen significant price hikes this year, with an 80% surge in LPG prices from January to September 2024.
The rising cost of cooking gas has become a growing concern for Nigerian households. According to the National Bureau of Statistics, retail prices for 12.5kg LPG cylinders rose by 39% within the same period, further straining consumers. In response, the federal government removed the value-added tax (VAT) on LPG to ease the financial burden on Nigerians. Additionally, Ekpo announced plans to improve domestic blending, storage, and delivery facilities in the coming year, including adapting the Escravos LPG mix for local consumption rather than export.
While these efforts show promise in the short term, experts warn that long-term price stability will require more than just regulatory changes. Bayewu emphasized the need for strong political commitment and consistent policy implementation. “For lasting relief, we must address the broader systemic issues that are inflating LPG prices,” he said.
One key player in Nigeria’s LPG market, the Nigerian Liquefied Natural Gas (NLNG) company, has been a significant contributor to local supply since 2007. However, with the new export restrictions in place, other LPG producers are still in the process of adjusting to the new domestic demand dynamics. As a result, Nigeria’s LPG market is currently facing growing pains, and it remains uncertain how quickly the new policies will translate into lower prices for consumers.
For now, Nigerians may continue to experience high cooking gas prices as the country’s LPG sector grapples with these structural and economic challenges. Experts argue that while the export ban may provide some short-term relief, achieving affordable and stable cooking gas prices will require deeper, long-term reforms.