Alhaji Aliko Dangote, President of the Dangote Group, has announced plans to cut the price of Liquefied Petroleum Gas (LPG), often known as cooking gas.
He also pledged to begin direct sales of the product to customers if the existing wholesalers failed to allow the price drop in cooking gas.
However, industry players have expressed concerns about the idea, claiming that the billionaire intends to monopolise the LPG sector.
On Monday, dealers protested the decision, citing concerns about a potential monopoly.
During a recent tour of his refinery by some local and foreign guests, Dangote emphasised that the current price of cooking gas is prohibitively expensive for the general public, who rely on firewood to cook.
He stated that the refinery now produces 22,000 tonnes of LPG per day and is increasing production for distribution into the Nigerian market, particularly as Nigerians shift to using gas for cooking.
Speaking to members of the Lagos Business School CGEO Africa, at the refinery in Lekki, Dangote said, “The one that we didn’t write, which you must have seen, is LPG. Currently, we do LPG of about 2,000 tonnes per day. You know Nigeria is gradually moving to the usage of LPG. But I believe it is expensive, but right now we’re trying to bring down the price and make it cheaper.”
Dangote warned that “if the distributors are not trying to bring it down, we’ll go directly and sell to the consumers so that people will now transition from firewood or kerosene to LPG for cooking.”
Dangote plans to start the direct distribution of petrol, diesel, and aviation fuel to marketers nationwide in August, with 4,000 CNG-powered buses procured for the exercise.
Currently, cooking costs between N1,000 and N1,300 per kilogram. Dangote stated this would be reduced to ensure affordability.
However, it appears that LPG market players are unhappy with Dangote’s plan to disrupt the business.
During a conversation with our correspondent, Godwin Okoduwa, former Chairman of the Lagos Chamber of Commerce and Industry’s LPG and Natural Gas Downstream Group, condemned the idea as monopolistic.
Okoduwa expressed worry that the billionaire businessman should acknowledge the fact that certain investors developed the market from 70,000 metric tonnes in 2007 to more than 1 million metric tonnes in 2022, stating that partnership is the way to progress.
“I think it’s monopolistic. I think a market should be protected to encourage growth. The LPG industry in Nigeria grew from 70,000 metric tonnes in 2007 to over 1.3 million tonnes in 2022. That was done by collaboration — collaboration with the Federal Government, the NLNG, and offtakers. Everything was done in collaboration. It grew from 70,000 to 250 to 800 and now over a million,” Okoduwa said.
He emphasised that growth cannot be achieved through a monopoly but through collaboration. “Today, we are just under 5 kg or 6 kg per capita consumption in terms of LPG. Other countries are doing much more. South Africa is doing double digits, and Morocco and Tunisia are doing double digits. We can do much more.
“So, we should, as an industry and as a country, focus on how to grow the LPG industry and not allow someone (to frustrate the players). Yes, he has invested; yes, it’s a capital economy, but he should not be allowed to frustrate the players.
“There are people who have spent money, spent resources, even on business and development, and someone just comes in to reap from the work that has been done. I’m sure he wouldn’t have built if there had not been an existing market. The work has been done; he should respect the market and let us grow. It shouldn’t be a zero-sum strategy. It should be collaborative,” he said.
He recommended that though Dangote has the upper hand, he should embrace collaboration.
“My advice to him is that the pie can be bigger. The Nigerian market is about 1.3 million tonnes. The Nigerian LPG market can be 5 million tonnes. He should work towards collaboration rather than competition, because at the end of the day, everybody benefits,” he added.
When told that Dangote’s major concern is to bring the price of cooking gas to a rate where everybody can afford it and stop cooking with firewood, Okoduwa retorted, “I have news for him. He should go to the Northeast, where you have the least consumption of LPG. He should go to the Northeast and start developing the LPG infrastructure there. I think we will tell him thank you for that.”
Sharing a similar sentiment, the Executive Secretary/Chief Executive Officer of the Nigerian Association of Liquefied Petroleum Gas Marketers, Bassey Essien, doubted the possibility of Dangote selling gas directly to consumers or crashing the price.
“I am saying that it’s unrealistic. What is the position with PMS? Has the refinery been able to sell petrol directly to you and me for our cars at a very cheap rate?” Essien asked.
