For some time now there has been a continual surge in the price of Liquefied Petroleum Gas (LPG) popularly known as cooking gas in Nigeria. Across the country, LPG has recorded an unprecedented increase in price by about 240 percent.
Data obtained from the website of the National Bureau of Statistics (NBS) shows that in August, the average price for refilling a 5kg gas cylinder for LPG was N2,215. It rose to N2,397 in September. The price of refilling 12.5kg cylinder also increased from N4,514 in August to N6,164 in September.
The data also showed variation in the prices of the commodity in different states. The data revealed that Cross Rivers ad and Anambra selling 12.5kg at N6,897 and N6,779 respectively were the two states with the highest average price for September.
The two states with the lowest average price for September are Borno and Osun states, the product sold at N5,100 and N5,006, respectively. A visit to a few LPG stations on Tuesday in Ibadan, Oyo state capital reveals that the prices of LPG goes for between N3,050 and N3,200 for 5kg. For 12kg, it ranges between N7,150 to N7,300.
Available information has therefore revealed that the surge in price is a result of the fact that importers of the product have stopped importing it.
According to the Executive Secretary of Nigeria Association of Liquefied Petroleum gas Marketers, Mr Essien, importers stopped importing the commodity because of the introduction of custom duty and the value-added tax now imposed on imported LPG. He claimed that there are other issues and that as long as the marketers are not importing the commodity, local supply will continue to suffer a severe drop.
It is to be noted that over 60 percent of LPG used in the country is imported, less than 40 percent is locally produced. Therefore a halt in import implies that the country is left with less than 40 percent produced locally.
“The NLNG supplies LPG to terminals and these terminals sell to the marketers and at times in a day the price can go up by about three times. NLNG is now selling in the region of N11m per 20 metric tones truck with a cumulative daily increase of N300,000 to N500,000 without the imposition of VAT and custom duties,” he said in an interview with Punch.
NLNG stands for Nigeria Liquefied and Natural Gas. It is an independent incorporated joint venture that harnesses Nigeria’s vast Natural Gas (LNG) and Natural gas Liquids (NGLs) for export. Last week’s Tuesday, the company announced that it had decided to cut cooking gas exports to meet domestic demand. Despite this, the price of LNG has continued to increase.
Commodity Markets to Remain Volatile – Economic Commission for Africa
Commodity markets in Africa are expected to remain volatile in the coming months following the persistence of Covid-19 constrains in the supply chain and other global economic pressures, says Stephen Karingi, Director of Regional Integration and Trade Division at the Economic Commission for Africa (ECA).
Mr Karingi was speaking at the ECA Price Watch session with African finance ministers on ‘Commodity prices amid COVID-19: prospects and policy implications for African economies.’ This is the 5th in the series of presentation sessions of price development in a specific sector compiled and disseminated by the ECA Price Watch Centre for Africa.
He said that African economies remain largely dependent on primary commodities exports and that although the commodity sector in most African economies is a significant source of national revenues, high dependence on the sector means high vulnerability to the vagaries of international markets and volatile prices passed on to local markets.
“High commodity dependence is associated with lower human development indicator across the developing world,” said Mr Karingi, adding “limited diversification and reliance on commodities sector are detrimental to long-term development in resource-rich countries.”
The ECA director noted that the commodities markets in Africa reacted strongly to COVID-19 in early 2020, owing to restrictions, economic slowdown and uncertain outlook. From mid-2020, significant rebound in commodities prices were above their pre COVID-19 levels with short term volatilities partly supported by expansive macroeconomic policies
On the commodity markets outlook, he said the upside risk factors for the continent include improved economic outlook/gradual recovery partly driven by successful vaccines campaigns and control of COVID-19 outbreaks; expansive monetary and fiscal policies to sustain economic activities like the recent $ 1.9 Trillion rescue Plan in the US and the € 750 Billion recovery effort in the EU area ; dynamic construction and infrastructure sectors worldwide to support markets of some commodities; high production costs to put upward pressure on food costs; low carbon energy and electric vehicles to sustain markets for products such as cobalt, lithium and nickel.
The downside risk factors include the gloomy economic prospects, especially in industrialized economies if the new COVID-19 variant is not controlled; and slower growth in major commodity importing countries.
According to Mr Karingi the potential impacts of recent surge in commodities prices will see commodity exporters record increases in economic outputs and fiscal revenues; price volatility to result in macroeconomic instability, trade balances, investment flows; and potential negative weight of high prices on net commodities importers, especially with regards to food and energy commodities.
He recommended that countries should have an overhaul policy -fiscal, trade, human capital – to reduce strong dependence to global commodity markets. African countries should also promote economic and fiscal diversification, including through the landmark African Continental Free Trade Area (AfCFTA)
“AfCFTA will assist with Covid-19 recovery but expected benefits from AfCFTA will not be automatic. Member states must pursue ratification of the Agreement and implement it effectively,” he noted.
Oliver Chinganya, Director of the African Centre for Statistics (ACS) at the ECA, said while the macroeconomic effects are well known, the trends of commodity prices and their influence on the revenue of African countries require delving into deeper analysis to have good grasp of the situation.
“The recent commodity price movement raises questions on critical points that economic policies should consider both in the current situation as well as for longer term perspectives,” he said.
Mr Chinganya observed that over the last twenty months COVID-19, has exposed the vulnerability of African economies to global shocks and high dependence to remote world markets. This has led to disruptions in supply chains and slowdown in economic activities worldwide, which to some extent have affected the price of several commodities since the outbreak.
The last ECA Price Watch Centre presentation was held on June 22 and focused on Energy Prices in Africa: Transition Towards Clean Energy for Africa’s Industrialization.
Commodity Market and Exchange Can Develop Agricultural Sector – Osinbajo
There is a need to focus on developing our agricultural value chain, particularly the business of guaranteeing the creation of a proper commodity market with the right logistics that would be mutually beneficial to farmers and consumers, according to Vice President Yemi Osinbajo, SAN.
He made this assertion on Monday while receiving a delegation from Gezawa Commodity Market and Exchange, a Kano State-based private company that provides a specialized organized market, operating efficient transaction and delivery of agricultural, solid minerals, and energy-based commodities. The delegation was led by the Managing Director of the company, Mr. Muhammad Rabi’I Elyakub.
Prof Osinbajo stated that “we need all the focus that we can on developing our agricultural value chain, especially the business of ensuring that we create a proper market so that there is value,” adding we must make sure that “we are able to resource that chain well.”
The VP acknowledged that in Nigeria, “we are top producers of so many different agricultural products as well as minerals.
“It is in adding value, ensuring the value chain works effectively, ensuring that we can process, store, and trade, that’s really where the missing link is.”
Elaborating on the importance of the agricultural value chain, Prof Osinbajo reiterated that “I don’t know of any society that has been able to develop the whole value chain from farm to table without a very vibrant commodity exchange.”
He lauded the idea of a private commodity exchange noting that “a private commodity exchange is very important. I am a strong believer in the private sector’s involvement.”
Prof Osinbajo then commended the commodity company for having made “very quick progress in a very short time,” adding that the company has covered substantial ground.
He continued, “I’m impressed with what you have done so far. I think the idea is that there is only one way to make agriculture profitable for the average farmer and that is by creating a market that is systematic and recognizes the value and you can’t do that without establishing a proper market.”
While giving a presentation, the Chief Financial Officer of Gezawa Commodity Exchange, Dr. Abdullahi Ya’u highlighted the importance of having a commodity exchange market.
He stated that without an exchange “it would take Nigeria ages for the farmers, producers, traders in commodities to discover their potential, but with the exchanges, we can be easily globally seen and standardize based on international best practices. I believe this is one of the core anthems of this government.”
Investors Can Make $1bn from Palm oil, Says Adebayo
The Minister of Trade, Industry and Investment, Niyi Adebayo has announced plans by the Federal Government to collaborate with investors to implement backward integration programme across key selected priority products.
These products include, palm oil, sugar, cassava starch, cotton textiles and garments.
Adebayo disclosed this on Thursday, during his address at the second Andersen Africa-Europe Bridge Conference held virtually, a statement issued by his spokesperson, Ifedayo Sayo said.
The statement was titled ‘Nigeria’s Economic Diversification Agenda achieving positive results – Adebayo’.
It read, “He announced the implementation of the ministry’s backward integration programme across key selected priority products, namely palm oil, sugar, cassava starch, cotton textiles and garments, saying the government was prepared to collaborate with investors to achieve its mandate.
“For palm oil, Adebayo said there was a domestic market opportunity of about $1bn which potential investors could take advantage of.”
On cassava starch, he said while Nigeria remained the largest producer in the world, the ninister said a significant domestic supply gap existed with more than 95 per cent of cassava starch still being imported.
He said the government focus was on bringing in large scale investors to bridge the gap and increase production of cassava starch.
Speaking on cotton, the minister told the gathering that the government strategy was to leverage on the special economic zones for garment production for both local market and export.
He declared that the government was committed to the establishment of special agro-processing zones across the country so as to reduce post-harvest losses, increase value addition to farmers and enhance rural employment.
Adebayo said the government was partnering with the African Development Bank to achieve its goals in this regard, adding that the ministry would be willing to collaborate with potential partners in different areas of this project.
He said, “Similarly, we aim to build at least one agro-processing facility in each of the country’s 109 senatorial district by leveraging available government funding and exploring innovative financing methods such as public-private-partnership and grants.
“Nigeria’s agribusiness sector is full of opportunities across multiple value chains, especially in the area of processing.
“The outlook report from the Organisation of Economic Cooperation and Development and the UN Food and Agriculture Organisation states that the sector will undergo robust growth projected to rise 30 per cent between 2018 and 2028.”
Adebayo also declared that the Federal Government’s diversification agenda was achieving positive results with the recent growth in the country’s Gross Domestic Product largely driven by the non-oil sectors.
He added that despite the view that Nigeria’s economy has historically been driven by oil, recent growth has been driven primarily by the non-oil sectors.
He said, “Despite the view that Nigeria’s economy has historically been driven by oil, recent growth has been driven primarily by the non-oil sectors, such as financial services, telecommunications, entertainment, and of course agriculture. This shows that our diversification agenda is working.”
The minister said the previous year was difficult for the country, he added that the country’s economy was getting back strong and open for business with the investment climate improving.
“In the first half of this year, investment announcements were at $10.1bn, an increase of 100 per cent in 2020.
“Investors from places as diverse as Europe, China, Morocco, and the UK are making strong commitments.”
He added the present regime was working tirelessly to ensure that the commitments turned into ventures, enterprises, and businesses that positively impacted the nation.
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