Despite Nigeria being a gas hub, with huge reserves, penetration of cooking gas hovers at 11 per cent. This is coming at a time when the use of traditional energy sources such as firewood and charcoal threaten the environment and human life, amidst calls to reduce carbon footprint globally. With new entrants in the market, can Nigeria increase LPG usage? FEMI ADEKOYA writes.
At a time when many countries are exploring efforts to decarbonise their environment, the National Conservative Agency notes that Nigeria emits about 200 million metric tons of greenhouse gases from different traditional energy sources such as kerosene, burning of charcoal and others sources even as the country’s deforestation rate stands at about 67 per cent.
This has reportedly led to the loss of about 670,000 hectares of
primary forest and other living organisms that depend on rainforest for
Similarly, while the health of women is particularly endangered by constant exposure to smoke from firewood, charcoal and the processes through which such energy sources are retrieved, 150,000 women and children in Nigeria are reportedly affected by indoor air pollution and contributed to lead-causes of death.
Being a signatory to the Paris treaty on reduction of global warming, Nigeria is mandated to reduce greenhouse gases by at least 20 per cent by 2030. If properly implemented, the Federal Government’s LPG policy, which aimed at boosting cooking gas penetration and sanitising the sub-sector would therefore go a long way in promoting use of cleaner sources of energy.
The federal government had in June, announced plans to achieve over five million metric tonnes (5,000,000 MT) of domestic, commercial and industrial LPG utilisation in 10 years.To drive utilisation, the Federal Government removed Value Added Tax (VAT) from domestically produced LPG otherwise known as Cooking Gas.
Indeed, the Nigerian Association of Liquefied Petroleum Gas Marketers (NALPGAM) commended the move but urged the federal government to create a more conducive and enabling environment for investors in the industry, noting that deepening the consumption of LPG in the country has become a major interest of the Government and marketers towards ensuring the success of the programme.
The Vice President, Prof. Yemi Osinbajo, explained that specifically, for household cooking, the present administration is targeting a 40 percent adoption rate (i.e. 13.8m households) in 5 years, and 73 percent adoption in 10 years (33.3m households).
“We believe that the sub-sector can create up to 2 million new direct and indirect jobs in Nigeria. Our determination to prioritise the LPG sector development culminated in the Federal Executive Council’s approval of the National Gas policy in 2017, with dedicated input for the enhancement of the LPG sub-sector. Our driving vision has been to transform the sub-sector from a commodity sector based on export, to a value creation sector based on domestic utilisation and industrialisation,” he said.
One of the stakeholders and Managing Director of Prudent Energy, AbdulWasiu Sowami noted that huge opportunity exists in the LPG space as current statistics shows that the nation has only recorded about 25 per cent penetration.He added that with a growing population, the consumption of domestic gas will definitely increase.
With an investment of over $30m in the downstream sector, he said: “In the past four years, the government has been trying to spearhead the utilization of LPG through the office of the Vice President and technically, they have discouraged the NNPC from importing DPK and if you look at that DPK consumption, it has reduced and interest in LPG has increased, but the infrastructure to support this utilization has not been there. We have a few terminals and in our thinking we thought we needed to make this investment to be able to play and get mileage”.
A Terminal Operations Manager, Oladimeji Oladoja explained that migration from firewood to LPG can be encouraged if beyond creating awareness; cost-related issues are addressed.
According to him, many terminals are becoming integrated facilities to drive access to LPG products and other refined products.With a capacity of 6,000mt, Sowami explained that operators are gradually working towards achieving government’s target of five million tonnes in the nearest future.
On the need to explore local markets for supply, Sowami said: “If you look at the current domestic requirement in Nigeria, the local production unfortunately does not meet the demand. NLNG is an export oriented terminal, so it has long-term contract to supply internationally through the NLNG contract, so what they have dedicated for domestic is not even up to 50 per cent of the domestic market, so that is why we need to augment the requirement with a bit of importation.
“We are not part of the NLNG contract, because the terminal was not ready. Secondly, NLNG does CIF, they do delivery. We have just put in documents for them to come and inspect so that we will participate in the next contract that is issued in the next couple of months”.
Industrial use of natural gas, both as a fuel and a feedstock, according to the IEA, is set to expand at an average annual rate of 3% and account for almost half of the rise in global consumption to 2024.
Power generation remains the largest consumer of natural gas, in spite of slower growth due to strong competition from renewables and coal.
If Nigeria is able to expand utilisation of LPG in many households, stakeholders believe carbon footprint in the country will reduce, while the country’s huge gas reserves will aid economic development.