Gas Dealers Release New Prices for 12kg, 6kg Cooking Gas as Dangote, Depots Crash Rates Nationwide
- A new finding has shown how much retailers make on each kilogramme of cooking gas at the expense of consumers
- Despite cheaper depot prices, other costs, such as loading and trucking, combine to drive up cooking gas prices
- However, analysts believe that Dangote’s direct-to-consumer model could change the pricing dynamics
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Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.
Nigerians are paying a high price for cooking gas, as retailers enjoy massive profit margins of about 35% on every truckload in Lagos and Ogun states.
New data show that depot prices, driven by Dangote Refinery, have crashed drastically.
Source: Getty Images
How logistics drove up cooking gas prices
However, logistics and retailer prices combine to increase the burden on households.
Petroleumpriceng reports that depots such as 11Plc, Ardova, NIPCO, and Rainoil sell cooking gas at about N840 per kg, while NAVGAS sells slightly lower at N830.
A previous report by Legit.ng disclosed that Dangote slashed LPG prices to N760 per kilogramme to undercut the competition.
According to a recent report, a trader buying a minimum of 5,000kg consignment at the rate of N840 per kg spends about N4.2 million.
Ogun and Lagos retailers reaping big gains
Adding N200,000 for trucking and N50,000 for loading and other expenses brings the landing costs in Lagos to about N4.45 million or N890 per kg.
Apart from this, retailers sell to end users at N1,200/kg in Lagos and N1,300 in Ogun.
Consumers bear the brunt
Though new data has shown that the price has reduced to between N900 and N920 per kilogramme.
In Lagos, the price translates to a N310 margin per kilogramme, giving the retailers N1.55 million profit per 5,000kg, a return of about 35%.
In Ogun, the margin increases to N410 per kg, pushing profits to N2.05 million per 5,000kg.
For consumers, the figures show a staggering price, as refilling a standard 12.5kg now costs about N14,400 in Lagos and N15,600 in Ogun.
Experts say several households have already started rationing their gas use or using alternatives such as charcoal and firewood, exposing themselves to health and environmental hazards.
Dangote to the rescue?
Experts say Dangote’s recent announcement to supply products directly to retail outlets could change the pricing dynamics.
The project that at N760 per kilogramme, the refinery’s entry price is much lower than the N840 per kg middle ground.
If passed down effectively and fairly, consumers could save N480 per 12.5kg cylinder, representing more than N4,800 per household annually.
Recent data estimates that more than 12 million households rely on LPG. The ripple effect could be substantial.
They reveal that Dangote’s direct-to-market strategy can curb profiteering, drive competition, and ease consumers’ burden.
Experts project the way forward
According to industry stakeholders, while retailers say logistics and overheads drive up costs, the numbers tell a different story.
An N2 million profit on a 5,000kg truckload shows a market structure favouring sellers at consumers’ expense.
Source: Getty Images
Stakeholders advocate for new supply chains and strategies, such as Dangote’s direct-to-customer model, to stabilise cooking gas prices.
Cost of cooking gas increases by N100
Legit.ng earlier reported that the retail price of liquefied natural gas (LPG), also known as cooking gas, has increased at Nigerian National Petroleum Company (NNPC) Limited filling stations.
Legit.ng visited several stations on Monday, June 23 and observed that 1kg is now priced at N1,200.
This represents a N100 increase compared to the N1,100 offered last week.
Proofreading by Kola Muhammed, copy editor at Legit.ng.
Source: Legit.ng
