Kerosene subsidy gulps $1bn in 2015 – Osinbajo

Vice President Yemi Osinbajo has said the federal government spent over $1billion on kerosene subsidy in 2015 due to low level of Liquefied Petroleum Gas (LPG) consumption in the country.

The Vice President who spoke on Tuesday in Abuja at the domestic LPG implementation workshop for stakeholders regretted that despite Nigeria’s enormous natural gas reserve with huge human capital population, enabling environment which is critical ingredient for the realization of the nation’s full potential to becoming energy sufficient was missing.

“The low level of LPG consumption in Nigeria has resulted to a heavy dependence on kerosene and fire wood as domestic cooking fuel in the majority of approximately Nigerian households. This reliance on kerosene and firewood has substantial economic effect.

“Government had undertaken huge subsidies with over $1billion spent on kerosene subsidy in 2015. The significant high rate of deforestation continues to be recorded as over 95.76 billion metric tons of firewood was used in 2015”, Osinbajo stated.

He explained that the government was focused on unlocking the opportunities for utilization of gas as a catalyst for sustainable nation building adding that it was in view of making the country’s  industrialization drive gas based that a policy on gas was been developed.

“The Liquefied Petroleum Gas (LPG) has been identified as a viable source of stimulation for the socio-economic growth of our nation. Nigeria’s LPG consumption has been declining until Nigeria LNG Ltd intervened in 2007 by guaranteeing domestic supply.

“Since then, our nation’s total domestic LPG consumption has grown from just a low 50,000 metric tons per annum to approximately 400,000 metric tons per annum in 2015.

Though the Vice President noted there was improvement in the domestic consumption of LPG, he however said it translates to a per capita consumption of only less than 2.5 kilograms which is extremely low compared to the per capita consumption of some African countries such as South Africa which has 7.28 kilograms per annum at 9.45 kiligram and Moroco has 66.37 kilograms.

Also speaking, Tony Attah, managing director of Nigeria LNG Ltd said LPG industry is a gold mine for Nigeria stressing that the potentials for investment and job creation are diverse waiting to be tapped.

He said prior to 2007, LPG was elitist and the chain of supply was unsustainable especially how the product reaches its final destination but maintained that the NLNG intervened  and dedicated 150,000MT to the domestic market.

“In response to the demand growth, NLNG increased the dedicated LPG volumes for the domestic market to 250,0000MT per year in 2012 and is committed to further increases in anticipation of future growth in demand”, he said.