What a 12.5 kg LPG cylinder actually costs in rural Kwara — broken down
Most LPG market reports lump "Nigeria" into a single number — usually built off Lagos retail. The rural reality is different in three ways: the wholesale point is further away, the last-mile is real, and the trust premium for a reliable supplier shows up in the price. Here's what a refill actually costs us to deliver, and what households pay, in Ilorin and Ilesha Baruba as of May 2026.
The headline number
A 12.5 kg LPG cylinder refill at our Ilorin plant in May 2026: ₦8,000 to ₦10,500 depending on global Saudi Aramco contract prices and the naira-USD rate. The midpoint — ₦9,000 — is what we'll use for this breakdown.
The cost stack
Walking that ₦9,000 from raw molecule to refilled cylinder, here is roughly where every naira goes. Numbers are rounded; exact figures fluctuate weekly with global LPG and FX.
1. Wholesale gas — ₦5,500 (61%)
The biggest line. We buy LPG in bulk from depots in Lagos and Port Harcourt, priced off the international Saudi Aramco contract benchmark. When global LPG drops, this number drops; when the naira weakens, it climbs. This is the single line we have least control over — and the one a rural plant wears most heavily because we can't hedge in dollars the way the majors can.
2. Inbound transport — ₦650 (7%)
Bridger trucks haul bulk LPG from Lagos depots to our Ilorin plant. About 470 km. Diesel, driver, security escort and depot loading fees roll in here. Routing has improved since the western corridor reopened in late 2025, but it's still a meaningful expense.
3. Plant operations — ₦750 (8%)
The 10MT NMDPRA-licensed plant has a fixed cost base — solar power for compressor and pumps, NMDPRA compliance fees, plant manager and two operators, scheduled maintenance, insurance — that gets allocated across every kg dispensed. Solar electricity (rather than grid + diesel) shaves about ₦180/refill off this line versus a comparable diesel-powered plant.
4. Last-mile distribution — ₦450 (5%)
This is the line that doesn't exist in urban LPG economics. To get a refilled cylinder from our Ilorin plant to a household in Ilesha Baruba, Babanla or Patigi, we need a kiosk in the town and a motorcycle rider for the surrounding villages. ₦450 covers the rider's per-cylinder commission, fuel and the kiosk operator's share. Without this line item the gas doesn't actually reach anyone — which is why most Lagos-priced "low-cost LPG" never makes it to the federation's last 30%.
5. Margin and reinvestment — ₦950 (11%)
What's left covers risk (cylinder loss, late payment, currency moves), modest profit, and reinvestment into more 3 kg starter cylinders, rider safety equipment and our 2028 solar pilot. We deliberately keep this thin — we are betting on volume, not unit margin.
What households actually spend in year one
The refill is only part of the picture. A first-time LPG household also needs:
- Cylinder deposit: ₦18,000–₦25,000 for a new 12.5 kg cylinder (refunded if returned)
- Regulator + hose + clamp: ₦4,500–₦6,000, lasts 3–5 years
- Burner: ₦8,000–₦35,000 depending on whether it's a single burner or a 4-burner cooker
That gateway cost — roughly ₦35,000–₦65,000 to get started — is the real barrier, not the refill price. It's why our 3 kg starter-cylinder pilot exists: a ₦4,500 entry deposit gets a household onto LPG within a single market-day's earnings.
Where this price could go
Three forces will move this number over the next 24 months:
- Naira stability. Every ₦100 weaker against the dollar adds roughly ₦300 to the wholesale gas line. The reverse also holds.
- Domestic LPG supply. The new NLNG and Dangote off-take volumes are slowly displacing imports. As more naira-denominated LPG hits the wholesale market, the FX exposure on line 1 shrinks.
- Distribution density. Today our last-mile cost per cylinder is ₦450 because riders serve scattered customers. At 3× the customer density (2027–2028 forecast) the same routes carry 3× the volume — line 4 drops to about ₦200.
If all three move our way, a 12.5 kg refill could land at ₦7,200 in 2028 in real terms — without any reduction in margin or service quality.
Want the live model?
We share a quarterly cost-stack update with our partners and investors. If you'd like to see it, write to Fahmanltd@gmail.com — we'll add you to the distribution.