Cooking gas: Breaking cost barrier for indigent citizens

cooking-gasThe socio-economic benefits of switching from kerosene, firewood and charcoal to Liquefied Petroleum Gas (cooking gas) are innumerable, but the cost barrier remains a major setback for poor Nigerians, DAYO OKETOLA writes

It has been considered embarrassing that Nigeria, with its huge gas resources, has one of the lowest consumption rates of Liquefied Petroleum Gas popularly known as cooking gas in Africa. While statistics have shown that poor households in neighbouring countries like Republic of Benin and Ghana are already using gas for everyday cooking, Nigerians have remained on the threshold of using either kerosene, firewood, charcoal, animal waste or sawdust for cooking. Apart from its negative environmental effects, the health effects are also worrisome.

This poor statistics have always agitated the minds of industry players under the aegis of the Nigeria LP Gas Association, Nigerian Association of LPG Marketers, Liquefied Petroleum Gas Retailers Association of Nigeria and individual LPG companies such as NIPCO Plc, Oando Marketing Plc, Banner Gas and Techno Oil, among others.

The Lagos State Government even recently inaugurated the Eko Gas initiative in partnership with private operators to enhance LPG usage among the over 20 million Lagos residents.

Though experts have largely blamed the Federal Government for not having a policy to drive LPG consumption, saying countries such as Brazil and Morocco, where LPG consumption is high, made much progress riding on deliberate government policies.

Rather than formulate the right policies, experts lamented that the Federal Government had spent N634bn to subsidise the retail price of Dual Purpose Kerosene in the past three years. As a result, the Chairman, House Committee on Petroleum (Downstream), Mr. Dakuku Peterside, recently chided the government for wasteful subsidy spending that had failed to benefit the masses, while describing the kerosene subsidy scheme as ‘funding of corruption.’

According to experts, the government can contribute in a variety of ways in facilitating the expanded use of LPG by households through actions, both within and outside the LPG sector, to establish a virtuous circle of growing demand, increased investment and expanded availability of the product.

But LPG demand is growing and the NLNG that is saddled with the responsibility of supplying LPG to the domestic market had increased its supply volume from 150,000 metric tonnes per year to 250,000 metric tonnes per year. However, the demand has been limited to very few Nigerians considered as the elite. One of the reasons is the take-up cost of switching from using biomass fuel to LPG, a major hindrance to base-of-the-pyramid Nigerians.

Breaking the cost barrier for low income earners was recently given a fillip by Oando Marketing Plc, a petroleum product marketing company and a number of Micro Finance Banks with the aim of helping the poor to switch over from kerosene and other fuels that are not environment-friendly to LPG.

To this end, Oando Marketing signed a Memorandum of Understanding with the National Association of Microfinance Banks with a view to encouraging mass use of cooking gas in the country.

Some of the MFBs participating in the scheme include Foresight MFB, Lake MFB, Channel MFB, Esusu MFB, Capstone MFB and Infinity MFB.

Others include Sunrise MFB, Acute MFB, Strong Alliance MFB and Global Initiative MFB, among others.

The most significant aspect of the MoU is that low-income earners can now own the O-Gas 3-in-1 cylinder by approaching any of the micro finance banks with only N200 as an initial deposit and walk away with the complete set of portable 3kg O-Gas.

The 3-in-1 is an integrated cylinder, gas and burner certified safe for use by the Standards Organisation of Nigeria.

The Chief Executive Officer, Oando Marketing Plc, Mr. Abayomi Awobokun, who signed the agreement with the MFBs, said the 3KG cylinders were targeted at low-income earners.

He explained that such consumers would be expected to make a N200 daily deposit with any of the partnering micro finance banks for 30 days until they would have completed the payment cycle for the cylinder.

“The introduction of the portable 3KG O-Gas cylinder is aimed at addressing both issues of affordability and accessibility to LPG by the low-income masses.

“This integrated offering also suits the purchasing power of this socio-economic group as customers can refill with any amount they can afford per time through the company’s Pay-As-U-Gas metering system or swap the cylinders for an outright refill at N800,” Awobokun said.

Commenting further on the partnership, the Head of Marketing Communications, Oando Marketing Plc, Mr. Seun Soyinka, described the initiative as consistent with the company’s plan to switch millions of Nigerians from the use of biomass to clean, efficient, affordable and sustainable LPG via Oando’s 3kg O-Gas, an integrated offering that comes with a cylinder, burner and gas.

According to him, the O-Gas cooking stoves are directly available to end-users via the company’s existing vast network of over 500 retail stations and a growing network of authorised distributors.

He explained that Oando Marketing, through the selected micro finance banks, had started developing a tertiary network of retailers that would ensure that the 3kg O-Gas was available within 10 minutes to every end user.

The Chairman, National Association of Microfinance Banks, Lagos State chapter, Mr. Valentine Whensu, said the benefits of the scheme included the provision of a cleaner and safer fuel option for lower income households, reduction of indoor air pollution that causes significant health problems, a decline in carbon emissions caused by dirty fuels, and a decrease in the rate of deforestation in Nigeria.

The Vice-Chairman, South/West Zone, National Association of Micro Finance Banks, Mr. Olusegun Olusoga, in an interview with our correspondent, said the scheme was aimed at the grass roots, the low and medium level income earners in particular.

He said, “Our expectation is that we would further improve on the targeted market and also expand our coast and grow our revenue base too. The set objectives would be met, because they would be well informed about the health hazards inherent in the use of firewood and charcoal. Apart from the aforementioned advantages, they are expected to have economic advantage of the new process of cooking now and also in the long run.”

Olusoga, who doubles as the Managing Director/Chief Executive Officer, Iwade Micro Finance Bank Limited, said the feedback from member micro finance banks had been very encouraging, saying those that had yet to be in the scheme were seriously willing to join.

According to him, the consumers are embracing the scheme and are already making payments ahead of the inauguration date.

On foreseeable challenges for the MFBs, he said, “I do not see my members facing any challenges as a result of this beautiful partnership because, already, we are grass roots bankers and partnering with the organisation that is aimed at improving the quality of life of the people at the grass roots is a thing of joy to my members and if we are talking of logistics, we do not nurse any challenge because we are grass roots bankers; therefore, our member banks are in every nook and cranny of the country, and the products would be brought to us at our doorsteps.”

One of the key advantages of cooking gas is that it supports a healthier living and eliminates possibilities of health hazards. Stakeholders see this scheme as being in line with the Federal Government’s clean energy initiative, saying it will help to reduce deforestation and the emission of harmful gases into the environment.

Cooking gas, according to them, also helps to prevent indoor pollution, which kills up to 100,000 people every year, as a result of dirty fumes from the use of other forms of cooking.

The quantitative studies of the socio-economic impact of household energy interventions in developing countries carried out by the World LP Gas Association suggested that the socio-economic gains from switching to LPG are numerous.

The WLPGA said, “In the most extensive study carried out by the World Health Organisation in 2006, in a scenario in which 50 per cent of the people using solid fuels worldwide switch to using LPG, total economic benefits amount to roughly $90bn per year compared with net intervention cost of only $13bn.”

Experts, in view of the above, expressed strong support for the Oando/MFBs’ LPG intervention programme and urge more stakeholders to tow the line and promote the use of LPG in Nigeria.

 

Information from Punch was used in this report.

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