• Tuesday, May 28, 2024
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BusinessDay

Kerosene remains elusive

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Nigeria is the 6th largest exporter of crude oil in the world, but remains one of the major importers of refined petroleum products due to undermined refinery capacity and general lack of investment in the sector in the country over the years. Statistics show that there are over 6,000 independent petroleum products marketers and six major marketers of petroleum products across the country. Nigeria currently consumes an estimated sixty million litres of refined petroleum products – PMS, DPK and AGO per day. And Dual purpose kerosene (DPK) popularly known as kerosene in Nigeria has the highest demand and per litre profit of the three refined products with an estimated 60 percent of the population of the country using the product for cooking and lighting.

Exactly a year ago, the Nigerian National Petroleum Corporation (NNPC) assured the nation that there would be enough kerosene to go round for everybody that needs it to purchase at a price of N50 per litre, but unfortunately Nigerians never got it at that price where it is available. The NNPC claimed that through its subsidiary, the Pipelines and Products Marketing Company (PPMC), it supplies between 10 to 11 million litres of kerosene daily which is distributed through allocations to licensed marketers such as Independent Petroleum Marketers Association Of Nigeria, (IPMAN), Depot And Petroleum Products Marketers Association, (DAPPMA), Major Marketers Association Of Nigeria (MOMAN) and NNPC Retail Limited who sell to the general public through their retail outlets.

However, despite claims by the Federal Government that the price of kerosene is being subsidized; the masses cannot get the product at the subsidised price. In fact, it was reported recently that oil marketers in the country are making an illegal and abnormal profit on Dual Purpose Kerosene sold to Nigerians. According to the report, official price of DPK is supposed to be N50 per litre, but this has not been the case as consumers have continued to buy the product at N100 and above per litre.

Although, the Department of Petroleum Resources (DPR) have described the situation as disturbing and asked all marketers to revert to the regulated price of N50 per litre or be prepared to be sanctioned, some consumers and Analysts claim they have heard similar warnings before without a solution to the problem.

In fact, according to some Analysts, the diversion of kerosene to neighbouring countries, industrial use, aviation fuel, sharp practices by middlemen and pipeline vandalism are some of the reasons for its scarcity for domestic consumption. Furthermore, they state that there are quite a number of competing demands for kerosene, and until these are addressed by other relevant agencies, the issue of kerosene not being readily available for domestic use will continue to reoccur every now and then and the price will remain above the official N50.

Records show that the country spent at least N1 trillion over the past four years to subsidise kerosene, yet the poor who ordinarily should benefit from the subsidy, struggle to get the product even at much higher price. In the rural areas where most of the poor live, kerosene prices are far beyond their ability, and they have had to continue to depend on the forest for their energy supply.

It will be recalled that there has been repeated calls for the privatisation of the refineries, an exercise that would have helped the downstream sector improve it services to Nigerians and ensure the availability of petroleum products to the Nigerian population at reasonable prices; Turn Around Maintenance of the refineries is an exercise in futility from which the Nigerian National Petroleum Corporation (NNPC) will not make profit no matter what it does. Therefore, government should privatise the entire downstream sector without further delay, not just the refineries; but also, the 5,000 kilometre pipelines, and the 21 depots.