LPG: Maturity, discipline required to attract investments

The Liquefied Petroleum Gas (LPG) market in Nigeria, which experts say is about a $10billion market waiting to be harnessed, is said to require more discipline and maturity to be actualised.

Speaking recently in Lagos, during the seventh Annual Nigeria Liquefied Petroleum Gas Association (NLPGA) Conference and Exhibition, the Director of Marketing Development, World LPG Association, a global body of the NLPG, Michael Kelly, said despite the country’s huge market potential, it is experiences lots of inherent informalities capable of hurting it.

According to him, although the market is poised for growth, the idea to create avenues and channels for direct investment into the LPG sector is realistic, as the market has to become more disciplined and mature.

The theft of assets especially cylinders, Kelly noted, hinders investments in the market, and needs to be addressed through good regulation.

He disclosed that global optimism in the Nigerian LPG industry will lead to the organisation of an investment conference in Houston Texas next year, to position the country to potential investors abroad.

But this requires the government and industry players to work together to address the market’s challenges.

Speaking on the conference’s theme, “Running an LPG Economy,” Kelly expressed optimism, saying it is a great reflection of what is happening in Nigeria and its potential. “But I believe in the next five years, the LPG industry should have advanced more.”

In his comment about investments on cylinder manufacturing facilities, the Programme Manager, National LPG Expansion Implementation Plan (Office of the Vice-President), Dayo Adeshina, said the industry needs massive investment in that direction, even as the challenge would be getting the low income Nigerians to pay for them.Hence, the incentives for production must increase to encourage people venture in manufacturing facilities for cylinders.

Adeshina commenting on the government’s will to expand and address the sector’s various challenges, said the expansion would have to go hand in hand with increase in supply and demand, which is why they are appealing to NLNG to still work towards boosting supply since they are the major players.

Dayo pointed out that although a lot of the supply comes from the industry players, but the enforcement aspect is critical because safety is a big concern for the sector, as seen from some of the incidents in the past.

Meanwhile, the Chief Executive Officer (CEO), Banner Gas, Nuhu Yakubu, regretted that despite Nigeria’s LPG production of about five million tonnes per annum, Nigerians only consume about half a million tonnes in a market where “we should be consuming more than five million tonnes,” and over four million tonnes being exported.

He stressed the need to prioritise LPG because it is a locally produced commodity unlike premium motor spirit (PMS) or petrol which is been imported.

“Every car can run on gas if converted so let’s allow the product that we produce locally to take supreme,” he added.

Responding to the dynamics of demand and supply in the gas market, he said the issues affecting this dynamics are grossly inadequate infrastructure at the receiving, distribution, and retailing levels because of the peculiarity of gas.

“It comes with its expertise, professionalism and requires skilled manpower to operate.”

He however appealed to the government to develop the political will to bring about the right fiscal incentives and regulatory framework for investors.

Source: 
Guardian