Cooking gas dealers slash prices amid intensifying market competition

By Arthur Eriye

Nigeria’s liquefied petroleum gas (LPG) sector is entering a new era characterized by heightened price competition, as marketers reduce cooking gas prices in response to substantial decreases in depot rates. This shift has the potential to lower household energy expenses and help alleviate inflation in the coming months.

The recent price reductions are a result of a significant drop in ex-depot prices from major LPG suppliers, especially those associated with Dangote, which have lowered wholesale prices to approximately ₦980–N1,000 per kilogram, down from over N1,100/kg in prior weeks. This development has prompted rival depot owners and retailers to lower their prices in an effort to maintain their market share.

In major urban areas, retail prices have begun to decrease from the peaks of N1,500–N1,700 per kilogram that were observed during the supply constraints earlier this year, now settling around N1,150–N1,300/kg, contingent on location and transportation expenses. For numerous households, the expense of refilling a 12.5kg cylinder has dropped by several thousand naira compared to the highest levels seen in recent months.

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Industry experts attribute this price decline to an increase in domestic LPG supply, heightened competition among wholesalers, better product availability, and relatively stable foreign exchange conditions.

Nigeria’s annual LPG consumption is estimated at 1.3 million metric tonnes; however, domestic demand continues to exceed supply in certain areas, making the efficiency of distribution and pricing by major suppliers vital to the retail market.

The renewed competition arises at a moment when the Federal Government is amplifying its efforts to enhance gas utilization through its “Decade of Gas” initiative. Industry statistics reveal that Nigeria’s LPG consumption has markedly increased over the last ten years as more households transition from firewood and kerosene to cleaner cooking fuels.

Economists suggest that lower cooking gas prices may offer slight relief to inflation. While LPG constitutes a relatively minor component of Nigeria’s Consumer Price Index (CPI), more affordable household energy can lower living expenses and help temper inflation expectations, especially in urban regions where LPG has become the favored cooking fuel.

The National Bureau of Statistics (NBS) has consistently pointed out that rising energy costs are a significant factor contributing to headline inflation. Analysts indicate that ongoing reductions in cooking gas prices, if coupled with decreasing food prices and stable exchange rates, could bolster the current easing of inflationary pressures.

Energy analysts, however, warn that the continuation of the price decline will rely on sustained domestic production, stability in exchange rates, efficient logistics, and a steady supply from local producers. Any interruptions in supply chains or a renewed depreciation of the naira could swiftly negate the progress made.

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Industry stakeholders are calling on the Federal Government to expedite investments in LPG storage facilities, coastal terminals, and inland distribution infrastructure to ensure that the benefits of lower wholesale prices are effectively passed on to consumers across the nation.

For millions of Nigerians facing the burden of high living costs, the emerging LPG price competition presents a rare opportunity for relief. In addition to lowering household energy expenses, this competition is anticipated to promote a wider adoption of clean cooking fuel, enhance public health outcomes, and decrease dependence on firewood, which significantly contributes to deforestation.

Should the current trend of competition continue, analysts suggest that the cooking gas market could emerge as one of the few sectors within the energy industry providing substantial cost relief to consumers by the year’s end.