In recent days, Nigerian consumers, particularly caterers and housewives, have been greeted with enthusiasm as the prices of cooking gas experience a significant drop. Business Hallmark reports that the average price of cooking gas has plummeted by around 90% within the past week, presenting a welcome respite for households.
Notably, the cost of a 12kg cylinder, which was previously priced between N9,200 and N13,100 in May, has now dipped to a range of N6,350 to N6,950 in Lagos and neighboring Ogun State. Similarly, the average price of a 6kg measurement currently stands at N3,175, with a per-kilogram price of N530, showcasing a noteworthy N270 price difference.
While consumers celebrate the continued decrease in LPG prices, it is crucial to recognize the challenges faced by marketers who find themselves grappling with financial losses. Chinedu Orji, a cooking gas seller based on Fadehan Street in Ijaiye-Ojokoro, shares the disappointment of many traders who anticipated selling LPG at much higher prices following the conclusion of the election season. However, due to unforeseen circumstances, their expectations were dashed.
Orji explains, “Prior to the presidential and governorship elections, we made substantial investments in the product, stockpiling it in cylinders to capitalize on the transition period. However, due to low demand and the market saturation resulting from the new administration’s approach, major suppliers flooded the market, leading to a significant crash in prices.”
He further highlights the predicament faced by a colleague who had amassed 1,000 50kg cylinders of cooking gas with the intention of selling them for profit after the elections. Now, this colleague finds themselves desperate, offering the cylinders to Orji at a meager price of N36,000 per cylinder.
Although tempted by the offer, Orji remains cautious, considering the rapidly declining prices in the market.
Conversely, consumers express their delight at the downward trajectory of prices, hoping for the trend to continue. Wale Adedayo, a resident of Lagos, recently shared a receipt for his purchase of a 12.5kg cylinder of cooking gas on June 1.
According to the receipt, Adedayo acquired the cylinder at a price of N6,950, equating to approximately N556 per kilogram. Adedayo voiced his satisfaction, stating, “When comparing the price of a 12.5kg cylinder in May, which was N9,375, with the current price in June, N6,950, it is heartening to witness such a significant decline. It is important to acknowledge and appreciate the reduction in prices as well. This is a positive development.”
Consumer analysts attribute the substantial drop in LPG prices to various factors, particularly emphasizing the petroleum and gas industry’s positive response to the new administration led by Bola Ahmed Tinubu.
Dr. Peju Bernard, a consumer analyst, highlights the prevailing optimism among importers and traders in the LPG sector, as they speculate about the potential for further reductions in cooking gas prices. Bernard explains, “There is a growing belief within the LPG sector that the new administration will fully liberalize the industry, fostering increased competition that is expected to drive down prices.”
She further emphasizes that the rush among industry players to sell off their existing stock from storage tanks is a proactive measure aimed at avoiding prices dropping below profitable margins. Bernard asserts that the current prices accurately reflect the fair market value that Nigerians should be paying.
However, she issues a word of caution, stating, “It is essential to bear in mind that businessmen are driven by self-interest. They are patiently awaiting the actions taken by the new president.
If President Tinubu fails to swiftly implement decisive economic measures as anticipated, these marketers may revert to exploitative practices and resume business as usual.”
The decrease in cooking gas prices has undoubtedly brought relief to Nigerian consumers, presenting an opportunity for improved affordability and financial stability in households. As citizens eagerly anticipate further price reductions, it is imperative for the government to take proactive steps to ensure fair competition and protect consumers from potential exploitation in the future.