Why Price Of Cooking Gas May Not Come Down Soon

In the past two months, the price of cooking gas have gone beyond what ordinary Nigerians can afford.  Before now, it cost about N2500 to fill a 6kg cylinder, but now it is about N4, 500. The increase in the price has left many Nigerians helpless in the midst of growing poverty.   While consumers are anxiously waiting for when the price would come down or stabilize, there is indication that the price may not come down soon due to the following reasons.

Reliance on importation

Presently, about 60 per cent of the Liquefied Petroleum Gas , LPG, consumed in Nigeria is imported. Despite the Federal Government’s efforts to deepen the adoption of LPG, which have been yielding results.

Introduction of 7.5 per cent Value Added Tax (VAT)

The decision to increase the Value Added Tax, VAT, from five percent to 7.5 percent by the Federal Government is a big burden on the part of marketers who have fully passed on the tax burden to the consumers who are now compelled to pay more for the gas than before.

Dollar scarcity

The amount of dollar inflows is far less than outflow and this shortage has become a serious problem for importers of the LPG who need dollars to effect their importations and this is another reason the price of cooking gas may not come down anytime soon.

Devaluation of the naira

Since the local plants cannot meet the high demand of local consumers, the country has to depend on importation which is done through the use of foreign currency. With the present situation where the value of naira keeps falling against the dollar and other foreign currencies, it means more local currency is needed more than ever before to import gas.

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