LPG Sub-Sector Can Create up to 2 Million Jobs For Nigerians – Osinbajo

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The Federal Government through a range of interventions and policy implementation will significantly improve domestic and industrial utilisation of Liquefied Petroleum Gas (LPG) in Nigeria, according to Vice President Yemi Osinbajo, SAN.

Prof.  Osinbajo stated this on Friday at the commissioning of the Techno Oil LPG Cylinder Manufacturing Plant in Lekki, Lagos.

According to the Vice President, “the Federal Government will continue to actively support every effort to promote the use of LPG in Nigeria, as well as create and maintain an effective and a catalytic regulatory environment.”

Continuing, Prof. Osinbajo said, “the goal is to achieve five million Metric Tonnes (5,000,000 MT) of domestic, commercial and industrial LPG utilisation in 10 years. Specifically, for household cooking, we are targeting a 40 per cent adoption rate (i.e. 13.8m households) in 5 years, and 73 per cent adoption in 10 years (33.3m households). We believe that the sub-sector can create up to 2 million new direct and indirect jobs in Nigeria.”

He added that since the implementation of the coordination reforms, including the creation of a dedicated Project Management Office, great progress has been recorded in the various segments of the gas sector.

According to the Vice President, the progress recorded include, “removal of 5 per cent VAT from the domestic pricing of LPG, as a first step in giving domestic output an advantage against imported products.

“Development of a Marketer Cylinder Owned Model instead of the current Consumer Cylinder Owned Model. This will eliminate the consumers’ up-front purchase of LPG cylinders which, in some cases, are substandard, replacing it with a cylinder exchange, whereby the consumer only pays for the content. No household will need to purchase or own an LPG cylinder. The Cylinders will be delivered and retrieved by the Marketers who will also be responsible for the maintenance and refurbishment of the cylinders, making LPG accessible to a whole new segment of non-LPG users.”

Below is the full text of his speech:

Speech by His Excellency, the Vice-President of the Federal Republic of Nigeria, Prof. Yemi Osinbajo, SAN, GCON, at the Official Commissioning of Techno Oil’s LPG Cylinder Manufacturing Plant, in Lekki, Lagos, on Friday, 7th June, 2019

I am honoured to commission the Techno Oil, LPG Cylinder manufacturing plant today. This commissioning is a landmark moment for Nigeria’s mid-downstream gas sub-sector, and a reminder that we must regard our abundant domestic gas resource as an important component of economic growth and national prosperity.

Techno Oil’s investment auspiciously converges with our administration’s efforts to speedily diversify our economy, especially through domestic and indigenous solutions.

When we came into office in 2015, one of the issues we identified was the abysmally low domestic utilisation of Liquefied Petroleum Gas (LPG) in Nigeria. A nine per cent penetration rate nationwide, despite Nigeria’s domestic LPG production of 3 million metric tonnes (MT) per annum. For far too long our dominant fuel options have remained biomass fuels (firewood) or traditional fuels (petrol and diesel).

As you are all aware, these dominant fuel choices present significant health, environmental, economic and social challenges, ranging from increased carbon emissions; massive levels of deforestation, worsening the problem of desertification; and a high number of deaths resulting from indoor air pollution. According to the World Health Organization, the smoke from burning wood fuels is a major cause of women and children mortality in Nigeria.

Natural Gas and its derivatives such as Liquefied Petroleum Gas (LPG) are, on the other hand, not only cleaner and more friendly to the environment, they also present substantial economic and investment opportunities across the Nigerian economy.

Our determination to prioritise the LPG sector development culminated in the Federal Executive Council’s approval of the National Gas policy in 2017, with dedicated input for the enhancement of the LPG sub-sector. Our driving vision has been to transform the sub-sector from a commodity sector based on export, to a value creation sector based on domestic utilisation and industrialisation.

The goal is to achieve five million Metric Tonnes (5,000,000 MT) of domestic, commercial and industrial LPG utilisation in 10 years. Specifically, for household cooking, we are targeting a 40 per cent adoption rate (i.e. 13.8m households) in 5 years, and 73 per cent adoption in 10 years (33.3m households). We believe that the sub-sector can create up to 2 million new direct and indirect jobs in Nigeria.

We have also demonstrated our commitment by establishing an Inter-Ministerial Committee and a multi-stakeholder national coordinating body – the National LPG Expansion Programme.

We correctly identified that it was necessary to emphasize coordination and collaboration, as previous attempts in enhancing LPG utilisation failed because of a fragmented approach within the Federal Government.

Since the implementation of the coordination reforms – including the creation of a dedicated Project Management Office – great progress has been recorded, including the following:

a.  Removal of 5 per cent VAT from the domestic pricing of LPG, as a first step in giving domestic output an advantage against imported products.

b.   Development of a Marketer Cylinder Owned Model instead of the current Consumer Cylinder Owned Model. This will eliminate the consumers’ up-front purchase of LPG cylinders which in some cases are substandard, replacing it with a cylinder exchange, whereby the consumer only pays for the content. No household will need to purchase or own an LPG cylinder. The Cylinders will be delivered and retrieved by the Marketers who will also be responsible for the maintenance and refurbishment of the cylinders, making LPG accessible to a whole new segment of non-LPG users.

c.   Strengthening the regulatory framework for the sub-sector

Let me assure you that the Federal Government will continue to actively support every effort to promote the use of LPG in Nigeria, as well as create and maintain an effective and catalytic regulatory environment.

The visionaries and management of Techno Oil deserve our hearty commendation for making this substantial investment in the development of the gas sector. The Federal Government will continue to work with you to ensure that you succeed.
Congratulations.

It is now my honour and privilege to formally commission the Techno Oil LPG Cylinder Manufacturing Plant. Thank you very much and may God bless you all.

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