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There are more than one reason to believe that the price of cooking gas is imminent.
Though, Local consumers of cooking gas have for some months now enjoyed low prices due to a drop in international prices.
All that would change next week or so! YOUNEWS Posits.
The price of LPG dropped from an average of N730 per kilogram in June to around N600/kg in July and increased to N750/kg in August due to the naira devaluation.
YOUNEWS reveals that the increase cannot be stopped because of some reasons
Perhaps nothing can be done to stem the tides, but gas consumers can just brace themselves for price hikes starting next week.
Vagaries of weather, elements of time and season are part of the factors responsible.
Others are rising international prices, high tax rates and prices of vessels, forex scarcity, and naira devaluation.
YOUNEWS checks revealed that international prices have gone up. The prices of vessels have gone up and taxes are high, but consumers are not earning more.
“Their purchasing power has gone down. Everybody is crying. Consumers, middlemen, and retailers have are feeling the impact because business is now on the low side,”
Consumers are now returning to firewood, charcoal, and sawdust for cooking.
Local taxes are major reason. The tax system is eating away the profit margin.
For every 1kg of gas priced at N700, tax would take way N3.50.
Another factor is
vessel scarcity in the international market.
It is already pushing up local prices of Liquified Natural Gas, also known as cooking gas in the coming months.
Vessel scarcity in the international market has led to charter rate hikes, ahead of the 2023 winter, when demand for heating fuel peaks.
As of August 1, 2023, charter rates surged to $284,750 per day for November and $206,750/day for October, quadrupling the current price of $70,500/day, according to data from Spark Commodities quoted by Bloomberg.
“Tanker supplies are increasingly tight because traders are using the ships as floating storage in a bet that LNG prices will rise as the weather turns colder.
“Volatile shipping rates can eat up margin for an LNG trader looking to cash in on higher winter prices, and rising transportation costs ultimately can mean higher prices for buyers in Europe and Asia.”
The number of LNG vessels floating on the water for at least 20 days also rose in late July, with 42 vessels tracked, which is about 27 per cent higher than the same time a year earlier.
Nigerian LPG prices are internationally benchmarked based on Nigerian Liquefied Natural Gas Contract prices and are always influenced by international prices.
And like other internationally traded commodities subjected to price fluctuations due to market dynamics, the NLNG CP is subject to changes and can be reviewed either upwards or downwards at least once to three times.
The devaluation of the local currency would also impact the domestic price of LPG.
The dollar exchanged for N749.62 on Wednesday, according to the Central Bank of Nigeria.
The Nigerian LNG usually sells the cooking gas it produces locally to off-takers based on the prevailing exchange rate.
