 Right, welcome back. It's still the breakfast on Plasti V Africa to a second conversation now The Cooking Gas Consumers Association of Nigeria. It's a consumer body They are appealing to relevant authorities in Nigeria to incorporate more qualified liquefied or more qualified liquefied petroleum gas marketers now This isn't a bid they say to enable cooking gas consumers have a more cheap and affordable Commodity in their various homes According to the group we're licensing More marketers to function as off-takers is what is obtainable in other liquefied petroleum gas Producing countries across the world the group also explained that the off-takers are those who are licensed by the NLNG Limited to buy gas directly from them and sell to petroleum gas marketers in the country the President of the Cooking Gas Consumers Association of Nigeria is Dr. Hakeem Olajide and he issued a statement on Monday as saying the appeal became necessary following what he you know described as a quote the shrouded process of selecting who qualifies as an off-taker by the NLNG a process He says the agency had been accused by some industry players of high-level Favouritism in the manner they select off-takers who are mostly individuals without the industries requisite qualification now joining us We have an all-in-guest analyst at Bola hon. Olajide. He's in Lagos and Johnson's via zoom Bola hon. Olajide. Good morning to you. Thank you very much for your time Thanks for coming Are you do you agree with the consumers? I mean I'm a consumer of Liquify of LPG rather, and I don't know anything about about off-takers I've had to just go and do some background study on this because of this particular topic But we just go to the gas station, you know, and we just feel Cylinders and take it home Tell us a bit more about this whole dynamic between the off-takers and then the gas marketers and the relationship how the whole workflow goes Okay Gas is also similar to oil In the in this dynamic So for for oil, you know when it is when the refined products are brought in you need The off-takers who are the people who have the storage Infrastructure they will take it from PPMC. They will put it in this as storage Infrastructure and then the market has come to them to buy So you have a similar structure with gas When NLNG has the LPG for deep you need the bulk off-takers Who buy from NLNG put it in their infrastructure Then the marketers can come to them and take and buy and buy from this bulk off-takers So the dynamics is similar First of all, it is the first time I'm hearing that it's a consumer station I thought you are natural have also been a member of consumer stations since they consume this The screwed up. Anyway, what they are talking about Is quite interesting. I read the stories myself and I I believe that there is the need To do a bit of Investigations so that if there are things to correct in that mix we can correct but also observe that some of the comments being made are not exactly True for example the the report charge spoke about the conditions for Appointing someone or giving someone a license as something that has been shrouded in some in some secrecy. It is absolutely Incorrect. There are two organizations that I inform NLNG in itself Which is a business of course because it's a business It determines who he wants to do business So he has a say on who can become the bulk off-taker. They meet the conditions and all that stuff Then as part of the condition of NLNG Comes the regulator, which is the uh, I think this time around it will be the bit stream regulatory agency of The nmpc. So that regulator must license you must okay you before you can even approach NLNG or A an off-take agreement with them But on the side of the regulator the requirement are public is public information You don't even need to go to the website. I'm sure if you google it it will pop up The same thing goes for the NLNG requirement. It is public information. It is available online It is available at the website, but if you don't want to go to work, if you google it Excuse me Those requirements will pop up. They are there. So they are not shrouded in mystery Let me also add that what this what the consumer decision is asking for is something that we cannot snap our fingers and put in place Which is why I said we must approach it with caution Investigate and if there are indeed certain scheming that is going on we must put an end to those kinds of scheme But you see NLNG is not a government establishment Although government has a significant investment in it, but the controlling Authority the controlling persons for NLNG are private organization The oil majors and the rest of them the oil majors have not been known To do all this kind of shenanigans that we are talking about that NLNG remains Probably the only establishment in Wigome has a significant business That is making money It cannot be making money if it is shrouded in those kinds of shenanigans that They have been accused of now I'm not holding brief or NLNG. Okay. I think that's rather than go this way. There must be some sort of investigations To let us know exactly what is going on so that we can open up that place The safety concerns are very important which is why I said we must approach it with caution You cannot just say oh because they are complete therefore I'm going to give a license to every Every dictator man hurry on the street So you give license to them today because we think we will be able to buy gas 1000 Naira cheaper And then there is a blowout tomorrow and 50 people are dead by virtue of the kind of infrastructure that we have So it requires something to be approached with caution well, so, um, I mean it's very, uh Insightful that which you have raised but I'd like to ask you on a personal note now because Sometime in September 2022 the nbs had raised concern about, you know, the increase in cooking gas At the time we're looking at 101 percent And so now for you what would you perceive to be responsible for, you know, the increase in cooking gas Is it all of this? Who play that you have mentioned or are there other factors that are responsible for this? There are several factors indeed One of it of course is infrastructure constraint that we have spoken about the reason nlng is not dishing out licenses Is that nlng has said I think that was sometimes last year when this issue also came up that look The infrastructure has to be there and up to scratch If they are not there or of the right quality because of safety issues We are not going to give those licenses That is that is taken. So Infrastructure constraint is one number two is the price in the international market as well When you look at Europe, you see the same problem. You go to parts of Asia. You see the same problem You go to America. You see the element of the same problem Prices are up. So there's a global dimension also to the prices that we are seeing So the third dimension will be where there are schemes and games that are going on in the system Which I said requires investigation or is something we cannot jump into and say, oh start issuing licenses No, let's investigate if there are indeed people who are trying to game the system Let's be able to stop them because here is it Where there is catalyzation in which a few people can come together for me cartel and detect the price of an item It it tend to please This public please the system So what the consumer association is agitating for is let's be able to have more players When there are more players in that space It could it will break any element of catalyzation and prices could become more liberalized and better for the people So we must look at that direction. There's also uh issues around when we had uh the the flood The flood affected production because some of the gas That nlng process are also coming from producers. Some of these producers were affected By the flood. Well, I think the flood issue has cleared now So that should not be an issue around the september that you were referring to Part of the problem was also the flood all right, um, uh, the the lpg value chain is uh, It's um, uh, it's the issue here and you said you don't believe there's any hanky panky going on And but from what what I what I've read about this and from what you're saying uh And even what the the consumer association is saying We need to have an increase in the number Of off-takers so that we can serve the increasing number of terminals and increasing demand Um in in the country today From what I hear we have about eight storage terminals in nigeria And the storage terminals are increasing. So if this off-takers take the the lpg from nlng They can they can they they now give it either directly to the suppliers or they store it and then give it out to retailers now If we are seeing increasing storage terminals both for locally produced lpg and for imported lpg because nigeria imports about 55 of its the lpg consuming discount, which is a Not too good Don't we need to with the increasing demand increase those who are of taking these products from from the nlng I mean what kind of infrastructure are we talking about that will prevent you from saying we're going to give it to more people Let mobile come into the business because you have a greater greater demand Most most of the people who have the infrastructure Would not will normally have The license that's what i'm saying The requirements are clear. They are not some secrets And if you meet this requirement look A nigerian that could construct or a business that could put in place an nmpg storage facility It's not a small business It's not it's not a small business that cannot work into The regulatory agencies of it's another discussion. I'm you know, what are the issues? What are the requirements here? They are i'm provided. I meet it They are not also businesses that cannot approach nlng So if there are specific Players who are who feel that things are not going right It would be nice, which is why as a less also investigate if there are specific Businesses you are putting place your infrastructure. You have met the requirements stated by the regulatory agency And nlng but you have been denied license Then it requires investigation and questions to be asked if We make these more licensing more available to people who are qualified Like I said, we will be breaking the cartel when you have Smaller number of people They form a cartel and they can control price and they can please the public So it is in the interest of the public that we have more players in that space so that we can break a And have a better pricing system I'm just saying which you approach this with caution and not make it at the expense of safety related issues So um, you know talking about pricing now A lot of persons have been concerned and even the government Some people have been saying why has the government not stepped into you know the issue of control But then you can't have that conversation without talking about you know subsidy Uh, what are your thoughts on this? Subsidy in in which area now in in PMS or in cooking gas no in cooking gas Well, we have to be very careful about the issue of subsidy Um, we have been dealing with the issue of subsidy PMS now for decades now either the military nor The or passenger regime nor Yeradruan nor gj nor pmb has been able to deal with tax matter So we must be careful how we walk our way into another subsidy scheme rather What I will advise is that rather than subsidize consumption. Can we subsidize Production can we subsidize the earlier parts of that chain? for example infrastructure infrastructure if we are able to you know incentivize the provision of the necessary infrastructure It's a form of subsidy We make it possible for people to provide infrastructure infrastructure will help Distribution and it will lower the cost. There was a time in this country when an lng produces the gas energy is in disembodied in the symbiosis That same guy that is produced in biasa is first of all shipped to Lagos From Lagos it is dropped back to the to the east or on the south side where it was originally Because as at that time there were no infrastructure to hold those are serious infrastructure issues So you can imagine the cost that has been added By virtue of logistic of moving the gas first to Lagos and then trucking it from Lagos back to other parts of Nigeria where it will be consumed So rather than subsidize at the point of consumption government should consider The subsidy moving up the chain Like at the infrastructure level where you can incentivize provision of infrastructure Yes, but um That's also, I mean very understandable, but The question is still if government can actually have a hand in terms of controlling The price. I mean some people are talking about the uniformity. We're still Grappling with the issue of the pms. That's petrol as at this moment You can't say that there's a uniform You know price for petrol because some people get it at a certain rate depending on where you're buying from And there are several factors for all of this. So That's on the one hand. But however Do you think that that older alternatives that people can actually, you know, um fall back on Rather than, you know, cooking gas because it feels like The issue of demand and and supply would always play have a way in terms of the price as well So are there alternatives that people can fall back to? There are no alternatives that should be encouraged for now There are alternatives, of course You know from coal to firewood or whatever you People want to use even kerosene is expensive now um, so Those those are things we need to move away from the real Direction we must proceed. It's in the direction of using this gas Electricity is is an option, but it's not even there So We need to do all we can to encourage The more the increased consumption the consumption for capital in Nigeria is still low even comparable to some west African country So we must be able to incentivize The system devalued chain Such that there will be increased adoption of felpg as a way of cooking What i'm just saying is i'm not saying you cannot subsidize the system you can subsidize But we should avoid subsidizing it at the point of consumption Because at the point of consumption is not even where most of the cost the cost have been built up right from production even exploration So let's look through that value chain and see if there are opportunities for you know investment that will lower the total cost By the time it arrives at the point of consumption so that we are not Subsidizing consumption that that's my point. It's always a serious economic distortion when you subsidize All right, uh, there's still a lot of um, you know uncertainty secrecy Shrouding this this sector from The the upstream where the anal engine telling us they're going to supply a hundred percent of their Of its liquefied petroleum gas to the Nigerian market And that was there were a lot of posers and questions about how is that possible? And to we don't know what what exactly what percentage they are doing now And then now of course the uh, the the consumers association is saying there's a lot of secrecy In in the entire, you know off taking agreement and all that Government has done well because they created a free market for the terminal terminal Uh segment we have about eight, you know terminals at play and it ended the monopoly And you talked about, you know having cartels But for the off takers down to the marketers In between the the movement in those trucks to the storage tanks and then and to the gas stations We don't know what's going on. We're also hearing that foreigners And middlemen have captured the market, you know, we hear in the foreigners and middlemen in fact They punch put it up an article some time last month, you know, saying that uh, their findings revealed that foreign investors and middlemen slash off takers Who delight in incessantly Inflating gas prices to the detriment of Nigerians have hijacked The Nigerian gas market. This was in november This was in november number 21 2022 punch did an investigation, you know And they are saying that foreign gas investors and middlemen have been accused of being behind the major Being the major force behind the skyrocketing prices of gas across the country So this cartel thing you're talking about, maybe it might still be uh, at play if The the the authorities consent can't allow more people come in, you know, if it's supposed to be a free market So what are your thoughts your thoughts on this based on this punch investigation or Boulin? I am 100 For the need to license small people and the reason is clear It has to do with cartels and catalyzation when you have few players They can form a cartel. They control the price and they can fleece the public um It is also not impossible that there are indeed cartel We just need to be able to investigate. This is the road. This is where the regulatory agency comes in The regulator is always there to ensure that the people are not being fleeced So issues of people who are trying to game the system Are things that the regulatory agency must be able to seek out pick them and stop it So if foreign players They can come in if they see an opportunity I'm never going to out overrule that If they see an opportunity in Nigeria to make some quick money and they see that some ends are not properly Tightened they will come in and they will make money in this this economy So we must now fall upon the regulators because sometimes in Nigeria you need to Make a lot of noise for people to seat up to their response I'll give you a very good example When you talk about what is going on in PMS markets today Right from importation up until the station the regulatory agency are involved All right, the NMP is the sole importer. So the regulator is involved the tank farm NNPC The agency they sit in those tank farms. They see everything that goes on there They also go to the filling stations. So they know everything All right I bought out you've said it all and it seems to say a lot of similarity between what's happening in the PMS sector and then the LPG I think it's all about the system. Um, won't thank you very much for your time And for giving us this analysis to help us understand better. What is our play here? I bought out all logeries and all the gas unless you join that join this via zoom in Lagos. Thank you very much for your time Thanks for having me All right, we have more discussions ahead indeed. We'll be looking at concerns Being expressed as the government is said to have ignored Important factors driving inflation and we have a certain segment of the business community Giving some advice to the government to tackle inflation better. We'll talk about that when we return