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HOW LOCAL CONSUMPTION OF LPG (COOKING GAS) CAN INSTANTLY CREATE 20,000 JOBS IN NIGERIA

There was great excitement when the Federal Government through the Nigerian National Bureau of statistics NBS released  Foreign Trade Statistics for the Fourth Quarter of 2017, the report stated that Nigeria earned NGN 3,711,926,664,892 (12,130,479,297USD) from the export of petroleum products

  1. Crude Oil: NGN 3,254,614,337,082 (USD 10, 635, 994, 565)
  2. LNG: 416,588,113,039.69 (USD 1,361,399,062)
  3. Other Petroleum Gases: NGN 28,420,639,066, (USD 92,877,905)
  4. Liquefied  Butane: NGN12,303,575,704.40, (USD40,207,763)

*Exchange rate is 1USD=NGN306

The export of crude oil is crucial for Nigeria to meet her foreign exchange needs and the domestic market for LNG is still commercially low. This piece is focused on why Nigeria does not need to export LPG as it can be consumed locally, thereby creating numerous economic opportunities for Nigerians. The total amount Nigeria earned from the export of LPG for Q4 2017 is NGN40,724,214,770  (USD133,085,669)

LPG locally known as cooking gas in Nigeria has three kind of gases namely butane, propane and Iso-butane. They could be in one these form or in a mixture of any of them. LPG (cooking gas) is gotten during the refining of petroleum (crude oil), or extracted from natural gas streams as they emerge from the ground.  The approved Nigerian LPG (cooking gas) for domestic consumption is 100% Butane or a mixture of 85% butane and 15%propane, provided propane is not more than 15%.

See table 1: The typical composition of domestic LPG consumed in Nigeria

 According to the KiakiaGas price index (Daily LPG pricing in Nigeria across all the terminals in Nigeria in comparison to the Mont Belvieu pricing system) the Highest and lowest price for a KG of LPG (cooking gas) was NGN250 (USD 0.82) and NGN215 (0.70USD) respectively at the terminal (Large storage tanks where vessels load LPG into from the refineries and gas wells and a sales point to the downstream domestic market through trucks). The weighted average price per KG for the period of Q4 2017 was NGN232.5 (0.76USD).

To understand the quantity of LPG that can be consumed, divide the amount earned from exported LPG against the amount unit of LPG sold per unit at the terminal.

NGN40, 724,214,770 (USD133, 085,669)/ NGN232.5 (0.76USD) = 175,157,913kg.

To convert from KG to Metric Tonne you divide 175,157,913kg by 1000
175,157,913kg/1000= 175,158MT

To effectively distribute 175,157,913kg of LPG(cooking gas) in Nigeria, you need some basic infrastructure like LPG trucks and distribution plants to get the gas from the terminals to the end users.

We propose the use of mini skid plants because of the ease of setup and relative low expenses of set up and licensing. For the purpose of this piece we use a 5000kg LPG mini plant. With a good location and the right business support a 5000kg plant can retail its quantity 4 times a month which is

5000kg X 4 Weeks= 20,000kg per plant a month.

175,157,913kg/20,000kg = 8,758 LPG (cooking gas) plants of 5000kg capacity.

The trucks that will convey the cooking gas from the terminals to the various retail plants, assuming they are all Bridger trucks of 20,000kg capacity and their load and distribution cycle is once every 3 days it means the trucks will distribute:

20,000kg (truck capacity) X 10 trips (per month) = 200,000kg monthly, a truck can distribute 200,000kg worth of Cooking Gas monthly. To ascertain the number of trucks needed to effectively distribute the quantity we will divide

175,157,913kg (worth of gas) / 200,000kg (distribution quantity per truck) = 876 trucks.

The average price for Cooking gas to end user is NGN280 (0.92), the gross profit is around NGN40 (0.13USD) per kg, we estimated that with a good location each gas entrepreneur will sell at least 20,000kg worth of gas per month, which translates the gross profit to

20,000kg of LPG X NGN40 (0.13USD) gross profit per KG = NGN800,000 (2614USD) per month

Local consumption of LPG (cooking gas) can create 20,000 millionaires and help the government solve the unemployment gap in the country. It will create approximately 9000 business owners across the country;
each of the plants will employ at least 2 people which will create 18,000 jobs. The trucks will need a driver and 2 motor boys (truck driver assistants) which is an opportunity for another 2625 jobs.  The support businesses like mechanics for the trucks, LPG (cooking gas)plant installers etc that will spur the local economies around these businesses.

KiakiaGas is a leading integrated Gas solutions business with interest in production, distribution, retailing, Data management and Gas engineering solutions. Her gaspreneur scheme is designed to create sustainable and profitable gas businesses across the Nigerian LPG value chain. Write gaspreneur@kiakiagas.com or call/Whatsapp:+234 906 032 5773, +2348085269328 for more info.

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