Marketers blame NNPC for high kerosine price, scarcity

No, It’s Market Forces — NNPC

Despite assurances from the Nigerian National Petroleum Corporation (NNPC) that its three refineries are now producing Automotive Gas Oil (AGO), also known as kerosene, the price of the product has remained high, which has been attributed to scarcity of foreign exchange, deregulation of the product and diversion to aviation fuel.

The product, which was sold at less than N150 per litre about three months ago, has increased to about N200 to N250 a litre. The Guardian gathered that the price of the product already goes for NI88 per litre at NNPC depots; thereby forcing retailers to sell at exorbitant prices, taking advantage of the fact that kerosene has been deregulated.

Many of the filling stations visited by The Guardian were not selling the product, while others have increased its price. However, Ndu Ughamadu, Group General Manager and Group Public Affairs Division of NNPC insisted that the country’s three refineries have continued to supply about 4.8 million litres of kerosine daily.

This, he said, is in addition to the one cargo, which the corporation daily imports to compliment the output from the refineries. Some marketers, who spoke with The Guardian, said the price of the product is high due to the inability of petroleum marketers to import, thereby depending solely on supplies from NNPC.

According to them, the scarcity of forex and marketers’ inability to offset their loans, have made it difficult importing kerosene and other petroleum products into the country.

Just a few weeks ago, NNPC announced the release of additional volumes of 4.6 million litres kerosine to consumers around the country. Anibor Kragha, Chief Operating Officer of the Refineries, had said the Port Harcourt Refining Company Limited (PHRC), Warri Refining and Petrochemical Company (WRPC) and the Kaduna Refining and Petrochemical Company (KRPC) were all back on stream.

“This impact is not being felt due to the high demand for the product. The demand is higher than the supply, so the price will be affected,” Mike Osatuyi, the National Operations Controller of Independent Marketers Association of Nigeria (IPMAN) told The Guardian in an interview.

To make kerosene available, Osatuyi stressed the need for the Federal Government to make it possible for marketers to access foreign exchange, as well as make the refineries work at full capacity.

A marketer said: “The product is not really available, because whatever we are getting from NNPC is not enough to go round.  Another problem is that some marketers prefer to sell it as aviation fuel. There is scarcity of aviation fuel and kerosene can easily be supplemented for aviation fuel. Since the price of aviation fuel is high, kerosene easily comes as an alternative.”

The source accused NNPC of selling at ridiculous prices at the depot, saying, “We bought at NI44 per litre on Wednesday and they increased it to NI88 on Thursday.”

In response, Ughamadu described NNPC as a commercial entity, saying market forces now determine the price of kerosine, as it remains deregulated. Obafemi Olawore, Executive Secretary, Major Oil Marketers Association of Nigeria (MOMAN), said marketers are shunning importation because of the inaccessibility of forex, thereby leaving importation only to NNPC.

He explained that there has been discussion between the government and marketers, regarding foreign exchange differentials, delayed payments interest and bridging claims, which were expected to boost and sustain fuel supplies.

He said: “The government has stressed the importance of continued private sector participation in the entire downstream sector value chain and as such, find lasting solution to the outstanding debt.”