Last-Mile LPG Distribution Economics in Rural Nigeria

Last-mile LPG distribution decides what a rural Nigerian household pays for cooking gas, and it matters more than the price of the gas itself. In October 2026, depot prices sit around ₦990 to ₦1,150 per kilogram, yet families in many towns still pay ₦1,500 or more. The difference is not greed. It is trucks, distance, cylinders, losses and margins. Here is where the money goes, and how it can be brought down.

The Gap Between the Depot and the Kitchen

Start with the published numbers. According to Legit.ng's 8 October price report, Dangote's depot price is about ₦990 per kg, with Matrix at ₦1,100, Navgas at ₦1,125 and NIPCO at ₦1,150. Smaller plants in Lagos, Osun and Ogun charge ₦1,200 to ₦1,400. At retail, a 12.5 kg refill runs from ₦15,000 in cheaper markets to ₦20,000 or more in others, with a national average near ₦17,600 in September.

Those figures are mostly from cities and peri-urban markets with plenty of competition. Read them as a floor for rural areas, not a typical price. The distance between a depot and a village adds cost at every step, and each step is paid for by the household.

Where the Cost Is Added

The chain has four links, and each one carries a cost.

First, bulk transport. Gas moves from the depot to a plant in a bridger truck. A town 100 kilometres from the nearest depot pays for diesel, driver time, road wear and the truck sitting idle on the return leg. Fewer, bigger, scheduled deliveries lower the cost per kilogram; irregular small loads raise it.

Second, storage and handling. A plant needs a tank, scales, safety equipment, power and trained staff before it sells a single kilogram. Many rural plants run on a generator, and diesel becomes a quiet line in the price of every fill. Solar removes that line.

Third, cylinders. Households need a cylinder before they can use gas. The upfront cost of a 12.5 kg cylinder and burner is a bigger barrier than the monthly refill, and it is why people stay on firewood even when gas is cheaper per meal.

Fourth, the retailer's margin and the household's own travel. Where the nearest compliant plant is 40 to 120 kilometres away, families either pay a reseller who made that trip, or lose a day and the fare to make it themselves.

Why Small Volumes Cost More

Fixed costs do not shrink when volumes do. A truck costs roughly the same to run whether it carries a full load or a partial one, and a tank costs the same whether it turns over weekly or monthly. This is why a plant that sells steadily can offer a lower price than a micro-retailer who decants from a larger cylinder. It is also why trust matters: a rural customer who has been short-weighted once will walk back to the old fuel.

Utilisation is the second lever. A plant that runs at a fraction of its capacity spreads the same overheads over fewer kilograms. Anchor customers such as schools, hostels, bakeries and small restaurants raise utilisation and make household prices more stable.

Losses and measurement add a hidden layer. Gas that is decanted by hand, weighed on an uncalibrated scale, or sold in a cylinder that is not full never shows up in a price list, yet the household pays for it. Certified scales and refills recorded at the point of sale protect the customer, give the operator clean data and create the evidence that funders and carbon buyers want to see. In a market where a single 12.5 kg refill costs between ₦15,000 and ₦20,000, a few hundred grams missing from every fill is a real loss to a family.

What Policy Is Trying to Fix

The federal government has noticed the problem. The National Grassroots LPG Penetration Programme, launched in July 2026 under the Decade of Gas Initiative, targets five million households by 2030. It uses a depot, hub and node exchange model, with refill points expected within one to two kilometres of beneficiary communities, and barcode tracking of cylinders and refills. Beneficiaries also receive up to six free refills to build the habit.

That design points at the right problem. A free cylinder helps a household start; a refill point that stays stocked is what keeps it cooking with gas. The test will be whether nodes remain supplied and priced fairly after the free refills end.

Why This Matters

Fahman Energy's Site 01 in Ilesha-Baruba, Kwara State, was designed around this arithmetic. Before the plant opened, the nearest depots of scale were in Kaiama and Ilorin, so residents paid a distance premium on every kilogram. A 5MT solar-powered plant puts storage in town, cuts generator diesel from the cost base, and lets us plan bridger deliveries instead of reacting to stockouts. Our target is to price below small operators nearby by ₦20 to ₦50 per kg while keeping scales certified and visible.

The point for funders is that last-mile cost is where infrastructure investment pays most. Each plant that shortens the distance between gas and a kitchen lowers cost for every household in its catchment. The point for households is simpler: a nearby, honest, stocked refill point is worth more than a promotion.

What's Next

Distribution is only half of the story. Next, we will look at how the policy rollout and local operators can work together so that new cylinders keep getting refilled. If you fund, regulate or build in clean cooking, follow us on LinkedIn or get in touch, and tell us which part of the chain you want us to break down in more detail.

Fahman Energy builds last-mile clean energy infrastructure for the communities the grid forgot. Learn more about Site 01 or follow us on LinkedIn.