How kerosene has become gold

That the Nigerian National Petroleum Corporation (NNPC) has increased the price of kerosene three times in two months despite the unavailability of the product is disheartening. The fact that kerosene is the major source of household energy used by the poor in Nigeria makes the development unbearable. Ordinary Nigerians are going through hell to source for household energy in the absence of regular electricity, petrol and gas. Forests are being depleted to make firewood as alternative.

One cannot understand why kerosene that used to be taken for granted in this country in the 60s, 70s and 80s, suddenly turned into gold that ordinary people can no longer afford. The reason is not removed from the corruption-ridden oil industry system, which the behemoth, NNPC presides over.

Just like petrol, the unending kerosene scarcity appears to be stage-managed to justify the frequent price increases. The result is that, unlike in the past, kerosene now costs more than petrol, which effectively impoverishes the poor masses.

According to reports, NNPC, through its subsidiary, the Pipelines and Products Marketing Company (PPMC), has not been supplying the product since November but instead has been busy increasing the price of the commodity without justification.Indications are that many marketers have not been supplied with the product since November, 2017 despite making additional payments to that effect. A Punch newspaper investigation revealed that independent oil marketers paid N4.785 million for 33,000 litres of DPK since November 2017, which translates to N145 per litre but to date have not been supplied with the commodity.

According to the report, on May 3, this year, PPMC issued a circular announcing a further increase in price, which raised the price to N179.83 per litre for ex-depot Lagos while the ex-refinery was put at N168.94 per litre.Furthermore, the marketers were forced to make additional payments of N984, 390 on May 9 and N335, 610 on June 6, this year for the same product that was paid for in November, 2017. These increases brought the price of kerosene to about N190 per litre from an earlier price of N50 per litre.

The most annoying part, according to the marketers is that the product has not been supplied for the past seven months. They lament that each time they expected to receive what they had already paid for, they were told that they couldn’t because of expected price increase again, which the PPMC hinge on the appreciating crude oil price in the international market.

But the marketers see the development as fraudulent. While acknowledging that crude oil prices have been appreciating, they urged the NNPC to stop using the crude price instability to defraud them. They say this should not be happening under a government that is perceived to be fighting corruption. There is no doubt that the virtual unavailability of kerosene is embarrassing. Government ought to be embarrassed.

Unfortunately, owing to the fact that there are many embarrassing issues plaguing the system at the same time, government appears to have developed a thick skin to embarrassment. Nothing embarrasses the government anymore. Which issue is not embarrassing? Is it the epileptic power supply? Is it the dysfunctional refineries? Is it the endemic fuel scarcity that could erupt anytime? Is it the high cost of living? All these issues plague Nigerians who in turn have developed shock absorbers as survival strategy.

Ordinarily, government ought to intervene to close the gap in the supply of kerosene. But the same policies and problems that bedevil petrol and diesel also bedevil kerosene. The same vague reasons given each time there is fuel scarcity is being given in the case of kerosene. For instance, it is incomprehensible how the rising price of crude oil could be a factor in kerosene scarcity. Nigerians don’t understand how this is possible. Crude price increase ought to be a blessing to the country. Nigerians ought to benefit from the rising oil prices. But to turn around to attribute the development as responsible for kerosene scarcity is puzzling, more especially, when the ugly situation occurs only in Nigeria. Citizens of other oil-producing countries are not suffering like Nigerians.

Unfortunately, Nigerians are used to queuing up to buy petroleum products under very chaotic situation. Scarcities often occurred during high price regime or as a result of industrial action by different oil-sector industrial unions. At other times, policy changes like deregulation induced scarcity. The question is why petroleum products scarcity is unending in Nigeria even when there is oil glut in the world market? What could be done to stop the recurrent problem?

The cause of the kerosene scarcity is systemic dysfunction arising from years of mismanagement of the oil sector. The Buhari administration has inherited it and doesn’t seem to be addressing it. The absence of functional refineries to satisfy local demand of kerosene/petrol is the primary cause of scarcity in the country. Not until there are functional refineries that would put a stop to fuel importation, fuel scarcity will continue to occur, irrespective of who is in power. All hope is now placed on the Dangote mega refinery at Lekki in Lagos under construction billed to start production in 2019. Nigerians will have a new lease of life once the Dangote refinery kicks off production.

Before now, Nigeria had four refineries owned by the NNPC, located in Port Harcourt, Warri and Kaduna but there are now three. The two refineries in Port Harcourt built in 1965 and 1989 were merged into one in 1993, with a total refining capacity of 10.500 million metric tons per year. The Warri refinery was built in 1978 with a refining capacity of 5.5 million mt/yr.

Following years of low performance and high Turnaround Maintenance (TAM) cost, the Federal Government, wrongly, decided to hands off the building and running of new refineries and instead allowed private investors to take over. As for the existing refineries, the immediate past Jonathan administration offered an equity share of 51 per cent to the oil industry unions to assuage them. The aim was to privatize the refineries, which the unions vehemently opposed. That left the country in quandary. The refineries are not functional in government hand and at the same time not privatized. It is a self-inflicted pain that Nigerians are living with.

That Nigeria, a major oil producer, depends on importation for the supply of petroleum products is an aberration and a serious indictment on the country. The whole scenario is embarrassing, to say the least. The economy suffers incalculable loss. If the truth must be told, despite being a major oil producing and exporting country, Nigeria has not made appreciable investment on refineries like its peers in the oil cartel.Government should do something about the biting kerosene scarcity and skyrocketing price. The scarcity is seriously impacting Nigeria’s ecosystem. Fuel wood merchants are destroying trees to make firewood and charcoal, which many see as the cheapest and only alternative to kerosene and gas.