LPG: ‘We need constructive engagement with FG in 2014’-NLPGA boss

on   /   in Sweet Crude 8:03 pm   /   Comments


2013 has been described as a year that lots of attention was given to Liquefied Petroleum Gas, LPG also known as cooking gas, and the country’s preferred energy of choice. However, the attention is yet to hit national scale despite the comparative advantages LPG have over traditional fuel. In this interview, President of Nigeria Liquefied Petroleum Gas Association, NLPGA, Mr. Dayo Adeshina, outlined  the successes, challenges in 2013 and projections in 2014.

2013 Overview

In 2013, I took over as President in May. The market that we recorded last year was 150,000 tons and by the time you look at the other spare capacity that came,  we would have inched towards something much higher than that, but some of the data from that segment was sketchy. But in all, we did about 150,000 tons  in 2012 and we were competing with the figures in 2013, and we are hoping that we will surpass 2012.

Now, part of the impediment that we faced in 2013 was the short fall of NLNG/NIMASA face-off, which essentially cut supply for a couple of weeks. But after the resolution, it took about another month before normalcy could get back essential because we have just one supply vessel that has to shuttle back and front between Lagos and Bonny. As you know, all the LPG comes to Lagos first before it is distributed to other parts of the country.

So in terms of the production figures, hopefully ,that shouldn’t have affected so much of the supply in 2013. But, again the demand has really reduced significantly and in response to that, NLNG has increased from 150,000 tons to 250,000 tons in August, 2013.

With that, we started looking at ways of being prepared for the expansion in the market. We are tackling regulatory issues. We have had series of meeting with Department of Petroleum Resources, DPR to establish a more robust working relationship so that a lot of the players who are not adhering to the standards, enforcement should be carried  out on them.

We have also looked internally to see what we can do, so that we can help out from this wooden part. We are going to be talking to financial institutions on how we can get soft loans and potentials interest rates to support this market.

We are also engaging the Standard Organization of Nigeria, SON.  Because, a few of our members have been complaining of late that there are some charges that are arbitrary in the sense that for every LPG equipment ,you need to have a certification and the process is such that you have send two people from SON to go and do inspection at the factory. The cost of the ticket, the accommodation, the estacode , is borne by the company that wants the certification.

If the product passes the inspection, then you are issued with a certification/license to import. Prior to now, once you have that, then you will import the product mainly. Then we need to let them have samples of any shipment from that company, so that they continue to monitor the goods in order for them to meet set standard. But they now turn that to you now paying what you called “Service Charge” and then even before you import, if you are going to open an LC, they need to see the proforma invoice, an invoice value and they charge a certain percentage of that which we have had about two to three complaints from our members and we are now engaging SON to find out.

Truly, if we are making the entry into this market, a lot more difficult, then you will give in room for smuggling, people would by-pass the legal way when things becomes too difficult for them, then they will begin to smuggle things through the borders.

So the regulators are really important to us when it comes to any expansion of this market, and we want a working relationship such that it would be easier for our members, it would go a long way in making sure that the market is deepened.

During the year 2013, internally as an association, we also got the safety standard committee to interact lot more with safety as seen from the conference that we had, because that is the first things for any player. We are concerned that a lot of players have ways of doing things and some are not in line with what we expect in the international safety standards.

Therefore, our own focus for 2013, was to start regulating ourselves. We are going to be led by example for others to follow in the industry. We need to set high standards and follow them to the international levels. That is a key focus for us.

We want to interact with financial institutions, enlightening government agencies, state government as you can see from our interaction with Lagos state government since they took it upon themselves in 2013 as a state policy to use LPG as a cooking fuel of choice rather than fire wood or kerosene.

That expansion with the scheme project that they are doing right now will lead to massive awareness and influx of people into the industry. Now we need to set the standard for whoever it is that is going to participate in this kind of scheme for them to know that for them to participate in the LPG space, there is a minimum standard that is expected of them and certain level of education that they need to have because they are going to be handling certain equipment and products, therefore, safety plays a key part in that.

In doing that, we are actually involved with the state government and the Lagos Chamber of Commerce and Industry, LCCI in making sure that all those who participate in the Lagos State scheme adhered to a minimum safety standard.

Market situation before May 2013

Thanks to my predecessor, Alhaji Ibu, because as his deputy, I have been part of the executive for some time. The changes did not just start today, it has been work in progress and we still have not achieved our set goals. Like I said at the conference, if I come back in 2014 to say that the market is still at 250,000 tons, then I will have failed.

Personally, if  you don’t set high standards and goals for yourself, then you will continue to feel that you have achieved a lot and you won’t get out of that zone, you will continue to be in that zone.

Now, our bench mark is to achieve what Indonesia did because we have similar problem. They were able to surmount theirs so I see no reason why we can’t because, we have the man power, we have bulk of the gas locally, and that is over 4 million tons. By the time you begin to explore marginal field operators into producing LPG, then in terms of supply, there should not be any issues.

Our biggest problem is two-fold. One is logistics and the second is infrastructure. Infrastructure in the sense that like I said earlier on is that all the products comes into Logos and that put lots of pressure on Lagos. LPG does not go by rail or pipe, in Lagos, it goes by truck. If somebody needs LPG today either in Sokoto, Maiduguri or anywhere in the north , it will have to leave one terminal or the other by truck and you know the conditions of our roads. Somebody in Maiduguri shouldn’t expect to get that product in the next four days or five days if they are lucky. We need to have a lot more storage in certain areas, that’s number one.

Logistics like I said is a big problem, then the quality of some of the trucks you find around. Because of the nature of the price of LPG truck, not everybody can afford brand new ones. So the bulk of what you see out there is mostly second hand trucks.

I’m particularly worried and concerned because, if you don’t know the status, anybody can sell anything to you. It is up to you to make sure that those things are re-certified and qualify before they are brought into the country, but that does not happen. People just go to dealers and bargain for some of these equipment at a reduced prices. But the question is: How old is that equipment? Have the required test been done on it? A lot of people don’t bother to carry out some of these tests  on the trucks. So that is a big concern for us.

For a country of a population size of 175 million people, should we really be having 400 trucks? We should be having between 2,000 to 5,000 trucks. Now the other concern is that a lot of people that operate these trucks are not well qualified. How qualified are they? Do they know that they need to be extra careful?

Part of what would happen in 2014, is to train our truck drivers. We have made arrangement with one of our member who has a training center in conjunction with World LPG Association to set up training programs for LPG truck drivers. That is one program lined up for 2014.

Another problem is that, a lot of the equipment needs to be imported and the tariffs that we are paying make it expensive to be in the LPG space. If you want to buy a cylinder now, you would be paying N15, 000 especially when foreign exchange rate increase, the duty is big factor. So that is major challenge.

Other achievements in 2013

There are still work in progress and when you say achievement, I don’t want to look at some of those things as achievement because they are our day to day responsibilities. We have not achieved as much as we expect to achieve because essentially there are work in progress like I said earlier.

You only achieve  when you have finished. When you are still doing the work, then you can’t say that is an achievement. You can say certain things had happened, mile stones have been achieved. I will not say there has been achievement, I would rather say that there is better co-ordination within the association. My predecessor was able to steer us in the right direction, which is the reason behind the co-ordination within the association and setting up certain frame works to improve and explore other areas that has not been explored before.

I believe that the quickest and shortest way to get a message out is through the press. Create that awareness because people need to know, if people don’t know then, they will forever sit back and say kerosene is the best. The mind set of everybody is that kerosene is for the poor people. Now the poor people are they not human beings? Aren’t they supposed to get what is best? Because they are poor people , you will continue to kill them with dirty fuel.

Kerosene is not for human consumption, it is for aviation market and that is why kerosene does not get to them. It naturally goes to where it should go, which is aviation, but somebody is paying the price because it is being subsidized and somebody else is profiteering from that because they know it is not for this market, they get it at subsidized price and take it to another market.

So awareness is critical not just in letting them know that this is actually the fuel for you, but the other aspect is that it is safe. Forget about the negative comments that it is unsafe. The first set of enlightenment campaign that the LPGA Chamber of Commerce and Lagos state did was to have a road show to sensitize market men and women, Land Lords association, artisan telling them that LPG is the product they should be cooking with, with practical demonstrations.

If you go to Surulere and Ikorodu today because that was where the campaign started from, those selling Bean Cake (Akara) are using LPG to cook. And part of what they tell is that all the time they were using kerosene and sweating, LPG cooks faster than they expected. So there is quick turn-around.

Before that it was taking forever for them to cook now LPG is cooking faster for them and they are not smelling of sweat and smoke. The difference between an LPG kitchen and kerosene is clear. Just look up at the wall it is black with kerosene.

It is part of the things that you would see a lot more because of the cooking for life campaign.

2014 projections

We want better engagement with the government because the awareness we are talking about needs to be on a national scale.

There is fundamental problem with desertification at the moment in 19 states of the country. Part of the solution is LPG. People are cutting down trees for fire wood, we need to stop that, we need to let people have a sense of belonging. We know we can do that. Lagos is not Nigeria, it is just one state in all the 36 states. So people in Abuja, Sokoto, Kano, Gombe, Yola and all other states need to use LPG.

The good thing is that, people are reading about it, people are asking questions about it from other states, saying how this kind of scheme in Lagos can be replicated. So it needs greater co-ordination from the federal government because they have wider coverage and having a federal policy which is our aim, then we know that the industry would truly evolve, then we would have solved some problems for the federal government. More people would be employed because it is going to be a multiplier effect, more tax revenue for them, less people would suffer from respiratory problem, less places suffering from desertification, cleaner environment but more importantly it can also clean for carbon credit.

It’s more of constructive engagement with the federal government. Our major target is engagement with the federal government in 2014 and a lot more campaigns.

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