There are many local government area in every states of Nigeria. From small towns and villages to large cities. All these localities are of different distances from their closest delivery depots, which in turn, are also different distant from their supply terminals. Each have a specific cost of delivery and this complexity is one of the reasons why it is difficult to publish a correct pricing for all areas.
For example, if you live 20km from a depot the cost of delivery would be much different than if you stay 50km away. Transport costs and refinery terminal fees are also a significant part of the overall cost of delivered LPG. Equipment cost, loading cost, account administration cost, road transport agencies charge and other costs and consideration will affect the price. Nigeria source LPG from foreign importers and refineries. This is the major downfall of the oil and gas sector. Logistics from sea ports to various depots across the states, impacts the pricing differ from different suppliers. There are three distance related transportation cost factors:
i. Distance from original source to the main terminal.
ii. Distance from the main terminal to the various Local depots.
iii. Distance from the total depots to your location.
DELIVERING IN BULK QUANTITY:
On a given delivery, a single road trip is obviously more economical. As an example, fuel dealers take thousand of litres per delivery, as compared to LPG cooking gas. Only customers (gas plants) who owned larger depot tanks may use just one gas delivery every 6 months. Seasonality can also affect LPG costs, as the demand is generally higher during festive periods like the new year, salah and Christmas celebrations. In general, higher demand results in tightening of supplies and an increase in prices.
EXCHANGE RATES:
Exchange rates at a given time could also impart the price of LPG. In Nigeria, when dollar price raises, cost of goods and services increases. There are no fixed price for LPG. Prices could depend on locations or economy stability of the country. As the international price for LPG and other petroleum products is in US dollar, which unfortunately for Nigeria government who depends solely on imports. Exchange rates change numberous times per day making the setting and publishing of prices even more challenging.
INTERNATIONAL MARKET PRICING:
LPG like other petroleum products, is an internationally traded commodity and influenced by international prices. Since Nigeria is part of the OPEC community, it is ideal for the cost of Nigeria LPG be set by OPEC. Note, international market price is not the same for local market pricing. OPEC changes on a monthly basis, forcing price review at least once per month. All international traded commodities are subject to price fluatuations. In most cases, Nigeria petroleum ministry does not have an influence on LPG price benchmark production. Taxes by government and subsidy affects the price you pay for LPG in local market.