Gas retailers say NLNG plant closure threatens price


the Retailers of Liquefied Petroleum Gas (LPGAR) says the closing Nigeria Natural and liquefied gas (NL processing plant may cause an increase in the price of cooking gas.

Mister Michael UmuduNational President, LPGARbranch of the Nigerian Oil and Natural Gas Workers Union (NUPE), told the Nigerian News Agency in lakes on Tuesday that the declaration of force majeure on LPG plant by NLNG posed a shortage threat to Nigerians.

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Michael said: “There is a high tendency for the situation to lead to a shortage of LPG in the country or an increase in price due to the possible use of imports.

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“This means that LPG traders will be more dependent on LPG importers having deposits in Lagos.

YAYA reports that NLNG in a statement dated October 17 from its General Manager, External Relations and Sustainable Development, Mr. Andy Odedeclared force majeure at its 22-million-tonne-per-year (mtpa) processing plant, due to widespread flooding that disrupted gas supplies to the company.

Force majeure is a common clause in contracts, which essentially releases both parties from liability or obligation when an extraordinary event or circumstance is beyond the control of the parties.

Circumstances include war, strike, riot, crime, epidemic, or sudden legal changes, which prevent one or both parties from fulfilling their obligations under the contract.

The retailer, however, comforted those who had lost loved ones in the country’s devastating floods, as well as those whose livelihoods had been affected by the flood.

“I also sympathize with the millions of Nigerians who have been made homeless as a result of the floods who are now living in refugee camps and those who are stranded in isolated areas.

“The flooding is a disaster and is expected to affect the production, supply and distribution of LPG in Nigeria.

“It’s very unfortunate because when natural disasters like the ongoing flooding in the country cause such force majeure on the part of a major LPG producing company, the impact can be huge on the market,” said Michael.

According to him, the implication is that no one can say for sure the extent of the damage from the flood and when it will recede, leaving the LPG market in a state of uncertainty.

“This is really a bad time for Nigeria’s struggling LPG sector,” he said.

Michael said the impact was already being severely felt in the northern part of the country due to difficulties in moving products through the flooded areas, especially the Lokoja-Abuja highway, which is affected.

“Even within the southern part of the country, the West-South highway within Niger Delta region is impassable, especially in the Bayelsa Y rivers States parts of the road.

“It is a great challenge because humans can hardly control natural disasters, especially in this climate where the intervention mechanism is very poor.

“Of course, there is a high tendency for the situation to lead to a shortage of LPG in the country or an increase in the price due to a possible recourse to imports,” he added.

Michael also said that the lack of transparency in the pricing system between NLNG and its buyers could drive a further price increase.

He recalled that the intervention of NLNG in the country’s LPG market was mediated by the federal government About 15 years ago.

“So it is unpatriotic for NLNG to keep the price secret.

“This is a huge barrier to LPG affordability for Nigerians, and of course the profiteer buyers enjoy the secrecy.

“Another issue is selling the product in US dollars.

I don’t know why what is produced in the country should be sold in foreign currency.

“Is not correct.

If it is true that the federal government has about a 49 percent stake in NLNG, then the government should still have a duty to influence what happens in the company without undermining the interests of other investors,” he said.

He said: “I think the naira is still our legal tender in this country and the government has a duty to enforce it.

“Again, it is obvious that NLNG, even at 100 percent of its LPG production capacity, is currently unable to meet domestic demand, therefore importing by major companies such as NIPCO.

“Importers appear to take advantage of this gap to price based on import cost, even as NLNG supplies most of the product domestically.

“I will advise the NLNG, as a matter of national service, to try as much as possible to continue their regular supply if it means adjusting their enabling facilities in view of the impact of the floods.

News sourceCredit: NAN

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