Financial Energy Review
….by Victor Egbo….
The Managing Director of NIPCO PLC, Mr. Suresh Kumar has urged the Nigerian government to incentivize International Oil Companies (IOCs), including Chevron, to convert more of their propane output into butane. This move, he hu, would boost local production of Liquefied Petroleum Gas (LPG) and help curb the rising cost of cooking gas in Nigeria.
Kumar made these remarks during the 2024 National Conference of the Nigerian Association of Liquefied Petroleum Gas Marketers (NALPGAM) in Lagos. He highlighted the readiness of downstream operators to accommodate increased LPG production, stating that the existing infrastructure can handle up to 5 million metric tonnes annually.
“Local production is currently inadequate, with less than 40 percent of the 1.5 million MT consumed domestically being produced in Nigeria,” Kumar noted. He stressed the need for more government incentives to encourage investment in gas processing facilities, which would expand local supply and reduce dependence on imported LPG.
Kumar expressed optimism that domestic LPG prices would decline with improved local production, especially as the Dangote Refinery and other refineries begin sourcing crude oil locally. He added that greater local production would reduce exposure to foreign exchange fluctuations and stabilize prices.
The NIPCO MD further emphasized the potential for increased investments in pipelines, storage, bottling facilities, and retail outlets, which would support expanded LPG supply and make cooking gas more accessible to Nigerians. He called on the government to back local refineries and develop policies that encourage investment in gas infrastructure.
Outlining NIPCO’s commitment to sustainable energy, Kumar revealed the company’s strategic investments in LPG facilities and its ongoing efforts to promote Compressed Natural Gas (CNG) for industrial and transportation use. He also highlighted NIPCO’s long-term goal of significantly increasing LPG consumption to match Nigeria’s growing population.
In response to Kumar’s remarks, Mr. Ogbuo Ukoha, Executive Director at the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), acknowledged the challenges in scaling butane production and urged more investment in blending facilities. He encouraged stakeholders to take advantage of the opportunities provided by the Midstream and Downstream Gas Infrastructure Fund to unlock growth in the sector.
As Nigeria continues to explore ways to reduce gas flaring and improve domestic LPG supply, both public and private sector collaboration will be crucial in driving the country towards energy sustainability and affordability.
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