The President of Dangote Group, Alhaji Aliko Dangote, has announced his intention to lower the price of Liquefied Petroleum Gas (LPG), commonly known as cooking gas.
He stated that he would initiate direct sales of the product to consumers if current distributors fail to bring prices down.
However, the plan has drawn criticism from industry operators, who argue that Dangote’s move could lead to a monopoly in the LPG sector.
On Monday, dealers voiced their concern about the potential for monopolistic practices associated with the proposed changes.
During a recent tour of his refinery attended by both local and international guests, Dangote emphasized that the high cost of cooking gas is a burden for many households, particularly those who rely on firewood.
He revealed that his refinery currently produces 22,000 tonnes of LPG each day and is increasing output to meet the growing demand for gas cooking in Nigeria.
While addressing members of the Lagos Business School CGEO Africa at the refinery in Lekki, Dangote said: “Currently, we are producing about 2,000 tonnes of LPG per day.
As Nigeria shifts towards the use of LPG, I believe the prices are still too high, and we are working on reducing them.”
He further warned that if distributors do not take steps to lower prices, his company would sell directly to consumers to facilitate the transition from firewood and kerosene to LPG for cooking.
Already, Dangote will commence direct distribution of petrol, diesel, and aviation fuel to marketers nationwide in August, supported by a fleet of 4,000 CNG-powered buses.
At present, the price of cooking gas ranges between N1,000 and N1,300 per kilogram. Dangote is determined to reduce this cost to make it more accessible.However, operators within the LPG market have expressed strong disapproval of Dangote’s initiative.
A former Chairman of the LPG and Natural Gas Downstream Group at the Lagos Chamber of Commerce and Industry, Godwin Okoduwa, criticized the plan as monopolistic.
Okoduwa urged Dangote to recognize that many investors have contributed to growing the market from 70,000 metric tonnes in 2007 to over 1 million metric tonnes in 2022, asserting that collaboration is essential for continued growth.
“I see this approach as monopolistic. A market should be nurtured to encourage growth. The LPG industry in Nigeria expanded significantly due to collaboration with the Federal government, the NLNG, and various stakeholders,” Okoduwa explained.
He pointed out that sustainable growth cannot be achieved through monopolistic tactics but rather through collaboration with existing players in the industry.
“Currently, our per capita consumption of LPG is only about 5 to 6 kg, while other countries, like South Africa, Morocco, and Tunisia, enjoy a much higher per capita consumption. We have the capacity to grow significantly.”
Okoduwa highlighted the importance of enhancing the LPG industry rather than undermining current market participants, noting: “There are many who have invested substantial resources in this market. It is crucial for Dangote to respect these contributions and allow collaborative growth rather than adopting a zero-sum approach.”
Okoduwa acknowledged Dangote’s dominant position but encouraged him to focus on collaboration rather than competition.
“My advice is that there is room for growth. The Nigerian LPG market, currently at 1.3 million tonnes, has the potential to reach 5 million tonnes. By working together, everyone benefits.”
Told that Dangote’s primary objective is to make cooking gas affordable and reduce reliance on firewood, Okoduwa advised: “He should consider developing LPG infrastructure in the Northeast, where consumption is currently low. That would be a much appreciated move.”
Similarly, Bassey Essien, Executive Secretary/Chief Executive Officer of the Nigerian Association of Liquefied Petroleum Gas Marketers, expressed skepticism regarding the feasibility of Dangote selling gas directly to consumers or significantly lowering prices.
“I find that scenario unrealistic. Look at the current situation with petrol. Has the refinery been able to sell fuel directly to consumers at a notably low price?” Essien questioned.