5 Reasons For The Increase In Cooking Gas Prices In Nigeria

Published on: December 19, 2021 (Updated on: April 22, 2024)

Increase in cooking gas prices

This post discusses 5 reasons for the increase in cooking gas prices in Nigeria. The Nigerian nation has experienced a massive surge in the price of cooking gas over the last few months and it’s fast becoming a major cause of concern. The spike has caused households nationwide to groan under the burden of added cost for cooking. It has also exacerbated the economic burden of families due to the rise in the cost of food, shelter, electricity tariffs, and fuel price.

This hike has left people wondering what the reasons for the increase in cooking gas prices are. The reasons aren’t far-fetched surprisingly and this article will elaborate on why and the factors that led it.

5 Reasons for the increase in cooking gas prices in Nigeria

1. Inflation

The general increase in the price of goods and services in Nigeria has affected the country drastically and cooking gas prices are not exempted. Inflation in Nigeria began tilting towards the upside in 2019. To make matters worse, the purchasing power of Nigerians has continually grown weaker over the years. This means that as prices are increasing, the purchasing power is decreasing, making the whole equation imbalanced.

2. Importation

Several goods in Nigeria are imported and that’s a well-known fact. A major percent of these goods are imported from other countries while a minor percent is produced in Nigeria. An example of such is cooking gas. 60 percent of cooking gas consumed in Nigeria is imported. This means that only 40% is produced in Nigeria. Considering this fact, it’s no wonder there has been an increase in cooking gas prices in Nigeria.

According to Trading Economics, Nigeria imports mainly: industrial supplies (27% of the total in 2014), capital goods (23%), food and beverage (17%), fuel and lubricants (14%), transport equipment and parts (12%) and consumer goods (7%). (https://tradingeconomics.com/nigeria/imports).

This may sound much but there’re a lot of reasons why Nigeria imports goods. One of those reasons is to meet consumer demand. Another reason why this state of affairs persists is that the quality of imported goods is far superior to those of manufactured goods.

3. Value Added Tax

Value Added Tax, which was formerly 5% is now 7.5%. This increase has affected the prices of goods and services across Nigeria, including cooking gas. Value Added Tax is also charged on imported gas so it’s inevitable that cooking gas prices will be increased. Note that the VAT charge on imported cooking gas was re-introduced. This is separate of course, from the taxes on imported cooking gas which also contributes to the hiked prices.

4. The Naira devaluation and foreign exchange

The devaluation of the Naira and the foreign exchange rate have both negatively impacted cooking gas prices–which is denominated in dollars–in the domestic market.

The Nigerian Naira has been devalued by 7.6%. This happened when the Central Bank of Nigeria adopted the Nafex rate as the government’s official exchange rate for the naira in 2021. The devaluation of the Naira has adversely led to an increase in cooking gas prices in Nigeria. This is because when a country’s currency is devalued, the currency’s value reduces and its purchasing power is weakened.

Foreign exchange is also responsible for increase in cooking gas prices in Nigeria. Importers paying for their logistics like shipping, NPH, port charges, and NIMASA charges do so in US dollars and that means added cost. By the time they resell such goods, they increase the prices to gain profit. As long as the dollar appreciates against the naira, cooking gas prices will keep increasing.

5. International cooking gas prices

Cooking gas is an internationally traded commodity. Consequently, it’s influenced, by international prices. Since the international price for cooking gas is denominated in US dollars, the Naira exchange rate affects the price of the commodity locally.

The negative impact on families due to the increase in cooking gas prices in Nigeria

The hike in cooking gas prices has affected many households negatively and in diverse ways:

1. Health implications

When families can’t afford cooking gas due to its hiked prices, they resort to alternative means of cooking such as cooking with a kerosene stove, coal pot, or firewood. These alternative means of cooking are harmful to human health. There’ll always be smoke when you cook using firewood. It’s a well-known fact that smoke inhalation is harmful to the human respiratory system.

Smoke emanating from firewood is a major cause of death for women and children in Nigeria. Inhaling smoke can cause a range of health problems, from burning eyes, a runny nose to chronic heart and lung diseases. These are only a few things smoke inhalation can cause.

2. Hazards

Some households buy adulterated cooking gas from sources that appear to be cheaper. In the end, the use of such cooking gas leads to gas explosions and consequently, loss of property or life.

3. General price increase

The hike in cooking gas prices has adversely affected households. Entrepreneurs who want to recover costs incurred while maintaining their profit margins increase the price of their goods and services. This usually starts a chain reaction where every trader increases the price of their goods. It ends in a general price increase inevitably.

4. Extra bills

Money that can be spent on other things, is used to acquire more cooking gas, thereby increasing the bills of households.