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Rising Gas Prices, Crisis In The Making

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By Dakuku Peterside 

Nigerians are facing hydra-headed challenges on all fronts: debilitating insecurity, extreme poverty, hyperinflation, high cost of food and essential consumables, diminishing trust in government and its institutions at all levels, and worse, there is no clarity on the way forward. Everyday quality of existence for the average Nigerian is depreciating, and people are quickly bemoaning their fate and hoping for salvation- both spiritual and physical. The level of disillusionment is mindboggling, and most Nigerians are perplexed.

This situation is made worse by the increasing economic uncertainties, the fallout of global pandemic, and historical neglect of development antecedents by Nigerian leaders who have failed to listen to and work for the over 90% of ordinary Nigerians struggling to eke a living daily, irrespective of the economic and security quagmire that has befallen the country.

In recent times, the continuous rise in the price of LPG gas (cooking gas) exemplifies everything wrong with Nigeria’s ecosystem and why our economic handlers should make a deliberate effort to create an atmosphere of optimism. Cooking gas is symbolic because it represents a product that many Nigerians, especially those living in urban and semi-urban areas, need for everyday cooking. Nigeria has it in abundance – 9th largest reserve  (about 207 trillion standard cubic feet as at 2019), and it is a source of clean energy that Nigeria is advocating for many of its citizens to change to.

Aside from being used as cooking fuel, it is used to power appliances, power some vehicles, and some small businesses depend on gas.  Whatever happens to gas (LPG) affects almost all families one way or the other. To show the shift that has taken place, in 2008, Nigeria needed only 40-50,000metric  tons of gas, but today the total annual requirement is about a 1.3million metric tons, a growth of over 2000 per cent.

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The price of cooking gas has more than doubled in the last one year. Granted that the rising  LPG prices are a part of a general escalation of other daily living costs: gasoline pump prices, electricity tariffs, basic prescription drug prices, and urban mass transportation, It forms part of the determinants of the escalating living costs and declining living standards. It will be pretentious not to acknowledge that this rise in living costs, shrinking of the purchasing power of average middle income and low-income families, and constant erosion of the value of the Naira is responsible for the current atmosphere of discontent and may result in an implosion if not checked.

To establish the fundamentals that led to the increase in the price of cooking gas, I need first to set some clear facts about the micro and macroeconomics of LPG gas in Nigeria and global trends that impact the LPG sector.

First, Nigeria gets a little over 450,000 metric tons of LPG from its liquefaction company, the NLNG, co-owned with the nation by three international oil companies, while the actual domestic demand stands at 1.3million metric tons, a shortfall of 850,000 metric tons.

These 450,000 metric tons of LPG represents about 100% of its Butane production (Butane gas is less volatile and is suitable for cooking). And by committing 100% of its Butane production, NLNG posit that it has prioritised the domestic market, thus realised its domestic supply target, whilst still focussed on the exportation of the 22 Million Tonnes Per Annum (MTPA) of Liquified Natural Gas (LNG) and 5 MTPA of Natural Gas Liquids (NGLs) it produces given its current capacity. At the same time, several Nigerian upstream operators are setting up LPG extraction plants to cut down gas flaring and monetise gas.

Second, NLNG supplies 40% of domestic demand. The balance is provided through other domestic producers or via imports. Therefore, NLNG’s production alone is not sufficient. Over one million metric tonnes of LPG were consumed by Nigerians in 2020, with over 50 per cent of the product imported by marketers. The implication is that we are a net importer of LPG and exposed to the vagaries of market forces and traders’ insatiable appetite for profit.

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Third, LPG is a product priced in the international market. The vagaries of the price fluctuations in the global market affect the price of domestic LPG because over 50% of LPG sold in Nigeria are imported from abroad and priced in US Dollars. Prices of gas keep soaring at the international market with consequential impact on the local market. Between January 2021 and August 2021, the prices of 5kg and 12kg cylinders of gas rose by nearly 300%.

Fourth, the exchange rate regime and the valuation of Naira against the USD impact directly on the price of LPG in the domestic market. NLNG, through the export of LNG and NGL abroad, gets the much-needed foreign exchange for the country, whilst the import of LPG by independent marketers depletes the foreign reserve and may have a negative balance of payment implications.

Fifth, just as any other product in the market, the forces of demand and supply and other macro-economic policies like VAT, logistics, and profit margin, directly and indirectly, affect the movement of the price of LPG in the Nigerian market.

A quick analysis of the above facts reveals that LPG is a product that opens itself to influences both local and international and almost has an inelastic demand structure because of its importance. An increase in its price does not produce a radical shift in the quantity demanded of it. Although LPG is souring in price, many Nigerians are left with little choice than to still buy it with significant unintended budgetary implications and resultant deprivation of the opportunity cost because of the increase in prices.

Some of these facts are changing with time and new realities because of new government policies that are helping increase production through independent gas producers (eliminating gas flaring) and expansion of the Train 7 project to increase capacity to produce more gas for the country. It is essential to look at the leading causes of the persistent increase in LPG prices in recent times.

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One major cause of the increase in the price of LPG is just the interplay of forces of demand and supply. The demand for LPG globally significantly increased as activities returned to near normal post-Covid 19 lockdowns and restrictions. However, in Nigeria, there is also the trend that has seen a tremendous increase in people switching to LPG as a cleaner energy source than other local alternatives. This trend has seen the demand for LPG in Nigeria more than double in the past two years, without corresponding increases in local supply. The difference is made up through importation.

The second reason is more macroeconomic in nature. As I pointed out above, LPG is imported with USD. In Nigeria, the value of USD is increasing against the Naira. In the parallel market last week, Dollar rose to above N570. The implication is that even when imported at the same international price because the Naira has depreciated, the price will reflect the current exchange rates.

Furthermore, significant stakeholders in the sector allege that importers, depot owners, and the Federal Government were complicit in the continuous rise of LPG price through price-fixing, reintroduction of Value Added Tax, exorbitant landing cost and levies, as well as dollar scarcity and devaluation of the Naira. The importers will embed expenses incurred into the price it sells LPG to the marketers at the depots and terminals. These expenses are passed on to end-users of the product.

Depot owners, on their part, indirectly engage in price-fixing. They sell the locally sourced LPG from the NLNG and the imported LPG at the same price. Even the locally sourced LPG from different parts of Nigeria is still sold at the international price. The cost of 20MT of LPG moved from N3.5m in January 2021 to N8m in August 2021. The vendors are using this opportunity to make quick money at the expense of the people.

The Federal Government reintroduced the 7.5% VAT on LPG in 2021, when other factors make LPG very exorbitant. The VAT added pushed the price up even further. Finally, the local production end of LPG is not helping matters (NLNG and marginal producers prefer to export than sell to the local market). We may not blame them because Nigeria needs the foreign exchange earning to boost our foreign reserve to give the Naira a fighting chance against the Dollar.

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This persistent increase in the price of LPG and other essential commodities may have dire consequences for many Nigerians. It may lead to a socio-economic crisis as people are gradually feeling frustrated over their plight. A cloud of discontent is slowly gathering, and I hope it does not lead to significant social dislocation. The price spike must not be allowed to continue. Government should take deliberate policy and regulatory steps to check the rising cost of gas.

In developed parts of the world, their governments actively protect and cushion the impact of rising gas prices on vulnerable citizens. Many European countries have intervened using different models based on their circumstances and economic leverage.

I will advocate that given the importance of LPG in the lives of the people and the critical role it plays as a clean energy source in Nigeria, the government must be proactive to deepen this sector and develop it for the country’s benefit. Government should explore different mitigation options, and this will be determined by the general relief windows for public welfare in the system and the extent of the government’s leverage in the economy in terms of control of consumer price mechanism.

 

In conclusion, rising cooking gas prices, combined with underemployment or unemployment, declining purchasing power for individuals will compound the inflationary pressure the average Nigerian has been subjected to on all fronts. A prolonged rising price of essential items needed in households could have social consequences and often worsens economic hardship and is an unintended invitation to public unrest and chaos. Many families in Nigeria today are walking on the street named ‘hopelessness’.

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Let our leaders and policymakers be more sensitive and responsive before the public reacts and starts asking questions for which the answers will either become too late or will make no meaning to a people under the heavy yoke of unbearable economic hardship. The purchasing power of the Nigerian middle and low-income families has shrunk dramatically.

Any additional spike in prices of essential items will mean mocking the common man and watching him dance to his grave. No economic calculation, policy, or strategy, in this case, will make any meaning. For many Nigerian families, a life of constant erosion of the value of the Naira and its non-availability has pushed them from living mode to survival mode, and nobody seems to care.

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Group Calls For Protection Of Journalists In Bayelsa, Imo, Kogi States

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The Media Rights Agenda (MRA) has urged for necessary measures to protect journalists and other media workers during this weekend’s off-cycle elections in Bayelsa, Imo, and Kogi States.

The group sent the request to the federal and state governments, as well as law enforcement and security agencies, stressing that the role of journalists in disseminating information about the electoral process is critical to ensuring free, fair, and transparent elections.

In a statement issued ahead of the elections in Lagos and signed by the Communications Officer, Media Rights Agenda, Idowu Adewale, MRA also urged journalists to be cautious and to use its existing hotline (08138755660) to report any threat or attack they may encounter during the process, as well as any obstacle.

Adewale said in the statement: “Given the pattern of heightened attacks on journalists and the media during previous elections, including the recent 2023 general elections, as well as the tense political climate in the three states in the lead-up to the elections, measures must be taken to ensure general security during the elections and provide adequate protection for journalists covering the elections.”

“Access to information allows citizens and other members of the public to have the information they need about political and electoral processes, facilitating effective public participation in elections,” he says.

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“Journalists and the media play an important role in ensuring residents and other members of the public have access to information and may participate in the process.

“As part of efforts to preserve the integrity of the polls, it is also critical that the safety and well-being of these interlocutors be assured and safeguarded.”

Lamenting the increased number of attacks on journalists in the run-up to the off-cycle elections, as well as earlier this year in the run-up to the general elections, he emphasised that “a free and vibrant media is fundamental to a healthy democracy, and journalists must be able to carry out their duties without fear, coercion, or violence.” During this vital phase, MRA stands ready to assist them and assure their safety.”

 

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Police Nab Husband, As Mother Of ‘Mummy Be Calming Down’ Boy Takes Own Life

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Men from the Edo State Police Command are said to have detained Mrs. Toluige Olokoobi’s husband after he allegedly murdered her.

Olokoobi was the mother of Oreofeoluwa Lawal-Babalola, the tiny boy whose video went viral in 2020 after he pleaded with his mother, “Mummy be calming down.”

Oreofeoluwa rose to prominence on social media after a video of him crying in an attempt to confidently appeal to his mother, who chastised him, went viral.

The film inspired Lagos State Governor Babajide Sanwo-Olu, who used it to deliver an Eid-el-Kabir appeal to Muslims and Lagos people in general to remain calm during the COVID-19 outbreak.

Following that, the youngster and his family met with the governor, who praised his bravery and poise.

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While little has been heard about the family in three years, heartbreaking news broke on social media on Tuesday that the boy’s mother had committed suicide.

According to an X user, Olokoobi committed suicide in Benin, the capital of Edo State, for unknown reasons.

The X user, who stated that he was present at the site on Monday afternoon, went on to say that she had refused to disclose her difficulties with anyone before committing herself.

“The woman in the viral Mummy Calm Down video has just committed suicide here in Benin,” he stated in an email.

“She refused to discuss her problems with anyone.” She abandoned three children for her husband, including the well-known Mummy Calm Down boy.”

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Meanwhile, confirming Olokoobi’s death in a chat with BBC Pidgin, the spokesperson of the Edo State police command, Chidi Nwabuzor, said her husband has been arrested and detained for questioning.

Nwabuzor said the husband reported the matter to the police.

The police spokesperson quoted the husband to have said that “he came home from the market when he saw his wife hanging with rope on her neck”.

Nwabuzor said she was rushed to the hospital and then to the mortuary after she was confirmed dead. (Adapted from a Vanguard report).

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Anambra: CP Aderemi Adeoye Decorates Promoted Officers With New Ranks

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The Anambra State Police Command Headquarters Conference Hall was a hive of activity Thursday as CP Aderemi Adeoye took turns decorating around 18 promoted officers of the command with their new titles.

The delight of some of the officers whose wives assisted the CP in decorating their husbands with their new ranks knew no bounds, as their husbands duly saluted their wives and the CP for their new positions and responsibilities.

Obi Innocent, one of the officers elevated to the rank of Chief Superintendent of Police (CSP), whose wife joined CP Aderemi Adeoye in adorning him with his new rank, said it was wonderful that the Inspector General of Police thought him worthy.

CSP Obi Innocent, the officer in charge of the Legal Department at Zone 13, Police Zonal Headquarters Ukpo, stated that his new rank was a call to service and that he would do his best to uphold the charge given to them by CP Aderemi Adeoye to respect and protect the citizenry’s fundamental rights in the discharge of their new assignments.

Charity Akharame, who was honoured with the rank of Deputy Superintendent of Police (DSP) and was the only female officer among the 18 promoted officers decorated with new ranks, said it was not an easy feat but she was grateful to be among those who were decorated with their new ranks.

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DSP Charity Akharame, the officer in charge of stores in the Anambra State Police Command, recalled how she began as a Police Constable and worked her way up to her current position as Deputy Superintendent of Police.

She stated that as a very disciplined police officer, she would follow the Police Commissioner’s directions regarding respect for all and sundry in the fulfillment of her constitutional obligations.

Jane-Frances Obi, one of the spouses of the officers elevated to the level of CSP, stated that being the wife of a police officer was not an easy assignment. As a result, she recommended any lady who is married to a police officer to be patient and understanding because the job is quite demanding.

Jane-Frances Obi, whose husband is Innocent Obi, the officer in charge of the Legal Department at Zone 13 Ukpo, believes the promotion is a reward for years of being patient, understanding, and standing in for them when they are not present.

Meanwhile, Emenike Chinenyenwa, who was decorated with the rank of Assistant Commissioner of Police (ACP) and presented a vote of appreciation, expressed deep gratitude to the IGP and the Chairman of the Police Service Commission for considering them worthy of being adorned in their new ranks.

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ACP Emenike, the officer in charge of Medicals, stated that the elevation comes with increased responsibility and that they will work harder in their new tasks.

CP Aderemi Adeoye praised the current promotion winners in his remarks, noting that two aspects make the police career very interesting and eventful. He stated that one is for promotion and the other is for positions.

CP Adeoye, on the other hand, urged the newly honored officers to develop more empathy, compassion, care, and dedication in the performance of their jobs.

The police chief insisted that newly promoted officers must first recognise that they share the same humanity as others, and as a result, they must treat all people with dignity and protect their fundamental human rights at all times.

CP Aderemi Adeoye stressed that without the enormous roles of spouses, they wouldn’t have been successful in their careers. He therefore congratulated all the promoted and prayed that God gives them good health to enjoy the new ranks and the energy to discharge the responsibilities of their new offices.

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  • Source: Independent

 

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