The cost of liquefied petroleum gas (LPG), commonly known as cooking gas, is on a downward trend as the Nigerian currency, the naira, gains strength in the market. Recent reports indicate that dealers and vendors have slashed the price of cooking gas from N1,500 to approximately N1,100 per kilogram.

Dealers Slash Cooking Gas Prices to N1,100 Per Kg Amid Stronger Naira — Image source: Nairametrics

Lowered Cooking Gas Prices Reflect Currency Shift

In March 2024, concerns were raised by Nigerians and gas dealers in the Federal Capital Territory (FCT) regarding the escalating price of cooking gas, prompting calls for urgent government intervention. According to findings from Legit.ng, dealers have responded by reducing the price of the commodity.

Cooking Gas Rates Witness Significant Drop

At the Gasland plant located in the Iju-Ishaga area of Lagos, the retail price of cooking gas has plummeted to N1,100 per kilogram, down from the previous rate of N1,500 observed in March. Additionally, the price of a 12.5kg gas cylinder has decreased from N14,400 to N13,300 within a two-week period. A manager at the Gasland plant attributed this price adjustment to improved access to foreign exchange for imports, facilitated by the recent appreciation of the naira.

Currency Fluctuations Impact Pricing

The manager highlighted the influence of currency fluctuations on pricing dynamics, noting that the appreciation of the naira has contributed to the reduction in the cost of cooking gas. He emphasized the significance of foreign exchange availability in determining product pricing, citing instances where previous high prices were driven by forex scarcity and elevated exchange rates.

Potential for Further Reductions

There is optimism among industry insiders that cooking gas prices could experience further declines if the Central Bank of Nigeria (CBN) maintains its interventions in the foreign exchange market. Recent data indicates a strengthening of the naira, with trading rates reaching N1,100 per dollar in the parallel market and N1,148 per dollar in the official market, compared to the previous rate of N1,600 recorded in February and early March 2024.

Strengthening Naira Boosts Affordability of Cooking Gas

To alleviate the financial burden on consumers, the Nigerian government has taken steps to reduce the cost of cooking gas. LPG was among the items granted tax waivers as part of efforts to make essential commodities more affordable for the populace.

Increased Supply from NLNG Lowers Cost

Furthermore, Nigeria LNG Limited (NLNG) has bolstered its supply of LPG to the domestic market, providing approximately 493,000 metric tons annually to meet local demand. This commitment aligns with NLNG’s pledge to allocate 100% of its LPG production for domestic consumption, a decision endorsed by the company’s board of directors.

The combined efforts of market forces, government initiatives, and industry commitments are expected to contribute to sustained affordability and accessibility of cooking gas for Nigerian consumers.

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