Nigeria's Cooking Gas Prices Jump 35% Despite Domestic Supply Surge

Cooking gas prices across Nigeria have climbed sharply this quarter, even as official data shows domestic liquefied petroleum gas output reaching its highest level in three years. The Nigeria Midstream and Downstream Petroleum Regulatory Authority reported output of 1.2 million metric tonnes in the first half of 2024, yet retail prices in Lagos and Port Harcourt have risen by more than a third since January. Households and small businesses that depend on LPG for cooking and heating are bearing the brunt of a market anomaly that regulators are struggling to explain.

Retail Prices Defy Supply Figures

At markets in Lagos's Alaba International Electronics Market, where dozens of food vendors rely on 12.5-kilogram gas cylinders daily, traders report that a refill now costs 12,500 naira, up from 9,200 naira in December. The 35.8 percent increase has outpaced general inflation, which the National Bureau of Statistics recorded at 28.3 percent in October. In Port Harcourt, some retailers have begun rationing supplies to regular customers, a sign that distribution bottlenecks are overriding what should be a buyer-friendly market.

The price surge cuts against basic economics. When supply increases, prices typically fall or stabilise. The Nigerian National Petroleum Company reported a 14 percent rise in domestic gas production between 2023 and 2024, yet these gains have not translated to cheaper cooking gas at the pump. Industry analysts point to structural problems in the midstream sector as the culprit.

Infrastructure Gaps Block Price Relief

Gas processing and storage facilities remain concentrated in a handful of locations. The Oben gas plant in Delta State and the Soku field in Bayelsa together handle the bulk of Nigeria's LPG output, but both have faced recurring maintenance delays. The NNPC's 2023 annual report flagged that the Escravos Gas-to-Liquids plant operated below 60 percent capacity for most of last year due to pipeline vandalism in the Niger Delta.

Transport costs add another layer. Nigeria lacks a nationwide pipeline network for LPG distribution, meaning most gas travels by road tanker. Diesel prices have risen 18 percent since the government removed fuel subsidies in May 2023, directly inflating the cost of moving cooking gas from processing hubs to retail outlets. The Nigerian Union of Petroleum and Natural Gas Workers estimates that logistics now account for 22 percent of final retail prices, up from 14 percent two years ago.

Business Owners Feel the Pinch

Small restaurants and food processors face the sharpest consequences. The National Association of Small and Medium Enterprises estimates that cooking fuel represents up to 30 percent of operating costs for informal food vendors. With gas prices climbing, many have already raised menu prices or switched to charcoal, which carries its own health and environmental risks.

In Abuja, restaurant owner Blessing Adewole told reporters she has considered closing her Buka, a neighbourhood eatery, because her monthly gas bill has doubled. "I cannot keep raising the price of pepper soup every time gas goes up," she said. Her situation illustrates how cooking gas inflation ripples through the informal economy, where millions of Nigerians work.

Regulatory Response Falls Short

The Department of Petroleum Resources has held three stakeholder meetings since August to address pricing concerns. At the most recent session in September, the agency called on major marketers to submit cost-breakdown reports to justify any further price increases. None have complied, according to a source familiar with the meetings who asked not to be named ahead of an official announcement.

The regulator's credibility has taken a hit. In 2022, the DPR—now restructured under the NUPRA framework—promised a price monitoring system that would cap margins at 8 percent for distributors. That system never launched. Without enforceable price controls or transparent cost data, industry observers say regulators are effectively powerless.

Investment Sentiment Turns Cautious

International investors watching Nigeria's energy sector have noted the cooking gas paradox as a signal of deeper market risks. TotalEnergies and Eni, both active in Nigeria's upstream gas sector, have not publicly linked the LPG price issue to their investment plans. However, analysts at Rand Merchant Bank flagged in a September note that infrastructure gaps and pricing dysfunction could slow planned gas-sector expansion.

Domestic capital has shown more caution. The Nigerian Stock Exchange's energy index has underperformed the broader all-share index by 12 percentage points this year, even as oil prices remained elevated. Investors say the cooking gas situation is a symptom of a sector where policy promises have repeatedly failed to match outcomes.

What Comes Next

The government has proposed a new LPG infrastructure fund as part of the 2025 budget framework, which the National Assembly will debate in November. If approved, the fund would allocate 200 billion naira over three years to build regional storage terminals in Kano, Enugu, and the Federal Capital Territory. Officials claim this could reduce transport costs and eventually lower retail prices by 15 to 20 percent within five years.

For now, consumers have little relief in sight. The Nigerian Meteorological Agency has forecast below-average temperatures for the northern states through December, which typically drives seasonal demand spikes. Market watchers expect another 8 to 10 percent price increase before year-end. Households that switched from kerosene to LPG in recent years are now caught between higher fuel costs and no obvious alternative.