Nigerians, particularly, low income earners, whose livelihood depend on kerosene for domestic uses, will continue to suffer from the scarcity of the products till January 2016, BusinessDay findings from the Pipelines Products Marketing Company (PPMC), a subsidiary of the Nigerian National Petroleum Corporation (NNPC) have shown.
This is because the NNPC has resolved to downplay the importation of kerosene in favour of importation of premium motor spirit (PMS), which is also currently scarce in the country, thereby keeping its prices very high.
As an important lighting and cooking fuel for low-income groups in the country, kerosene is heavily subsidized by the Federal Government, but it is very difficult to get at the N50 per litre price fixed by the government.
According to Vincent Ezeala, executive director, commercial for the PPMC, “kerosene subsidy is a racket as marketers who benefit from the subsidy are to sell to the public for N50 per litre but fail or refuse to do so.”
For this reason, he said, “in the next two months, the NNPC is going to downplay the importation of kerosene and focus on the importation of PMS in order to ensure sufficiency in the market, meaning that from now till January 2016, cargoes coming in will be PMS and not kerosene.”
Ezeala also noted that, in order to do away with the abuse of the kerosene subsidy regime by corrupt marketers, a gas master plan has been developed and awaiting presidential approval, and when unveiled and implemented, will do away with the kerosene racket on the basis of regular and favourable market forces.
At NNPC retail outlets, the product is sold at the N50 per litre price when available, but not without long queues of crowded and scrambling buyers, while other places sell for as much as N100 per litre, where the queues are shorter or non-existent.
Forte Oil, Capital Oil and Total Plc started selling kerosene at N50 per litre at their pump stations, first in Lagos and then in other places, but could not sustain the services.
Subsidies on kerosene have been defended because of the widespread belief that the poor will benefit from lower prices, but this has largely failed to prove realistic.
As at November 2013, official records showed that the Federal Government spent N634bn to subsidize the retail price of kerosene in the three previous years.
The breakdown showed that N110bn was spent in 2010, N324bn in 2011 and N200bn in 2012, amounting to N634bn in the three years under review.
By January 2014, the subsidy sum spent on petroleum products, including kerosene, between 2012 and 2013 jumped to N1.3 Trillion ($8.49bn).
The successful implementation of the gas master plan could be an important step in ending kerosene subsidy and commercializing the huge gas resources in the country that are wasted daily through flaring.
Nigeria has lost up to N173.76 billion or $868.8 million to gas flaring in 2014, according to data from NNPC.
The NNPC in its Annual Statistical Bulletin (ASB) for 2014, disclosed that oil and gas firms in the country flared 289.6 billion standard cubic feet (SCF) of gas, representing 11.47 per cent of the total gas produced in the country in that year.
Using the Nigerian Gas Company’s price of $3 per 1,000 SCF of gas at the current exchange rate realities, the flaring of 289.6 billion SCF of gas translated to a loss of $868.8 million, an equivalent of N173.76 billion.
In specific terms, the oil and gas companies produced 2.524 trillion SCF of gas, utilized 2.235 trillion SCF and flared 289.6 billion SCF.
YANGE IKYAA
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