By Yemie Adeoye
Apparently worried by the poor acceptance and patronage of Liquefied Petroleum Gas (LPG), also called cooking gas as a source of energy in the country, Oando Plc has perfected plans and strategies to help stimulate the demand and consumption of the product.
Other products such as kerosene and coal have been preferred in place of LPG as a source of energy for cooking on the premise that LPG is an elitist product and as such is very expensive.
It was for this reason that the company decided to introduce such packages as the pay as you gas system and the smaller size cylinders initiative to encourage lower income consumers to get the product at the volume and quantity they are able to afford.
Speaking on the sideline at the Nigeria LPG Association’s meeting in Lagos over the weekend Adeyemi Oreagba, Oando’s LPG Manager said the company having realized that major challenge to LPG consumption is the cost of the product it decided to bring in packages that will elicit interest in the product and shoot up demand.
He said:”After conducting research we found out that one major obstacle militating against the use of LPG in Nigeria is the unavailability of the product in quantity that is affordable to low income consumers.
To overcome this we felt there was need to come up with initiatives that will allow customers to buy whatever they can afford. And that is why we came up with the pay as you gas system. With this system if a customer runs out of gas and has N800 on him he can be able to refill with quantity that is worth N800. This is first of its kind in Nigeria.
“The other system we are deploying is to get smaller-size cylinders for people to pay for the cylinders over a period of time.
When these smaller-size cylinders are available then the refill cost will come down at any single point in time. We will now have something less than the usual 12.5kg that is common in the market so that customers will be able to make their choice. There will be 3kg, 5kg and other lesser quantities.
“Right now we are ready to bring in these smaller cylinders to empower retailers in form of micro franchises by giving them these cylinders and allowing them to sell to people in the rural and suburban areas and get their monies over a period of time.
This will reduce the burden and weight of the initial investment on the consumers as they will have to pay for the product over a period of time. No doubt this will eventually facilitate the switch from kerosene and firewood to LPG.”
He assured that the company’s infrastructure is capable of helping to carry out these initiatives as there are 600 retail outlets numerous warehouses, transporter and efficient workforce to support and drive the project.
“At present we have over 600 stations so we can say we have the footprints in term s of our retail outlets.
We also have many warehouses and partners to complement us. So for this pay as you gas system we are ready to deplore it to as many stations as possible. The system will be put to use in schools, hotels, universities and filling stations and other safe and convenient areas where it can easily be distributed to the masses.
We are also concerned with safety as regards to LPG and of course the cylinders. That explains why we have leak detectors in our refilling stations to help check that the cylinders that are being filled are not leaking. How this is done is that when you plug the detector in, if the cylinder is leaking it will automatically shut off.
“Apart from that we are also putting in place facilities to make sure that our pay as you gas system can be used to refill cars.
We have partners that have taken the Department of Petroleum Resources (DPR) and Standard Organisation of Nigeria (SON) to Turkey and Germany to look at car conversion kits that will be brought into Nigeria and be used for the switch. We are talking to state government and some local players on the need to key in into the idea of converting some of their cars and public transport using petrol and diesel to the use LPG. What this means is that we are trying to encourage LPG usage to other forms and not limiting it to cooking.
Already we have refilled a number of cars and there are a lot of people who are prepared to switch to LPG, he said.”
Oreagba listed the benefits of the initiatives and other steps geared toward encouraging LPG usage to include the creation of employment owing to the flooding of market with different sizes of cylinders, provision of safer and cleaner fuel owing to the burning efficiency of LPG as compared to kerosene and coal and the protection of the environment by LPG in contrast with coal and firewood which imperil the environment owing to burning.
On why the price of gas has continued to be on the high Oreagba said this can be attributed to the fact that the product is still deregulated.
“Let’s be realistic LPG is still a deregulated product. As far as LPG is a derivative of the crude the price of LPG will continue to be a function of crude price. So whatever the cost of crude is it is going to ripple down through all the other derivatives of crude of which LPG is one. Why it is not noticeable in petrol is because petrol is subsidized.
Even the kerosene which is a subsidized product is still expensive. So one can incontrovertibly say that what is causing the price of LPG to go up is the crude price and other the issues in the Middle East , he stated.”
Oreagba concluded that so far investment in the LPG market has made capacity to increase from 70,000 tons in 2009 to over 100,000 tons in 2010.Out of the projected value in 2010 he noted that Oando was able to retail about 14000 tons owing to the number of caylinders it was able to push to the market.