Oil marketers dump kerosene importation over profitability
• Nigerians Groan As Price Stands At N350/Litre Amongst Scarcity
• NNPC, DPR Defend High Cost Of Product
• As PPPRA Refrains From Speaking
Two years after the Federal Government removed subsidy on National Household Kerosene, Nigerians, who largely depend on the product for domestic use, are facing the worst experience as oil marketers dump the importation over profitability.Though the product is being imported and sourced from local refineries by the Nigerian National Petroleum Corporation (NNPC) and sold to the marketers at a deregulated ex-deport price of about N190 per liter, end users, majorly people living below poverty lines hardly find the product in the market.
Indeed, consumers have had to compete with premium users in the aviation sector to buy a liter for about N280 – N350.The Federal Government had in 2016 removed subsidy on kerosene to save about $1b, which the county reportedly spend yearly as financial support for kerosene consumers, forcing the price to move from about N50 to about N190 then. Visit by The Guardian to most fuel stations in Abuja, yesterday, showed that the product now sells for around N250 – N350 per litre amongst scarcity.
Statistics released by the National Bureau of Statistic in May indicated that the average price per litre paid by consumers for Kerosene increased by 0.65 per cent month-on-month and to N280.29 in May 2018 from N278.49 in April 2018. This is as the average price for the refilling of a 5kg cylinder for Liquefied Petroleum Gas (Cooking Gas) also increased by 0.68 month-on-month to N2, 072.24 in May 2018 from N2, 058.19 in April 2018.
While the Vice President, Independent Petroleum Marketers Association of Nigeria (IPMAN), Abubakar Shettima, and other stakeholders, including Depot and Petroleum Products Marketers Association (DAPMAN) said importation of the product, basically used for cooking and lightning by mainly people living in the rural area is not profitable.The oil marketers added that they could not bring in the product because they were still owed subsidy arrears by the Federal Government.
However, Shettima noted that with the current NNPC ex-deport price, the price in the local market was expected to hover around N230 after necessary taxes, cost of transportation and profit are factored into the wholesale price, indicating that the middlemen were reaping off Nigerians or diverting to the aviation sector.The Department of Petroleum Resources has the statutory responsibility of ensuring compliance with petroleum laws, regulations and guidelines in the Oil and Gas Industry, including monitoring excesses of operators at retail outlets or any other locations where petroleum is either stored or sold.
Abuja-based spokesperson for DPR, Seidu Muhammad insisted that the scarcity and high cost of the product were due to the fact that the product has been deregulated; therefore the department did not focus on the price of the product.However, the Petroleum Products Pricing Regulatory Agency (PPPRA) was mandated to determine the pricing policy of petroleum products, including kerosene, regulate its supply and distribution, moderate volatility in petroleum products prices, while ensuring reasonable returns to operators.Spokesperson for PPPRA, Reuben Apollo did not respond to questions raised by The Guardian on the issue before this report was compiled.
“I am not aware any marketer is importing kerosene. I am aware they get from PPMC. Whether it is refinery product or imported I don’t know. You know that kerosene is deregulated so they sell at whatever price,” an executive of DAPMAN, who said he was not authorised to speak on the issue said.Asked why the marketers were not importing kerosene for domestic use, the source said: “if you are investing N1b and you know it is going to span over 46-50 days and you are making a profit of about N15 million, sometimes you will say you are not interested. The little we can do is to concentrate on PMS.”
According to him, the marketers can only import what is profitable to them, adding that the money government owed them has not been paid.An energy expert, who is the Chairman/CEO of International Energy Services (IES) Ltd, Diran Fawibe, decried the cost of the product, considering that the consumers are not in the upper class.Fawibe said: “There has to be some consideration because this is about energy poverty. If we have got to a point when the price of kerosene is now above the price of diesel, it means something has gone wrong.
This is an unacceptable situation. Government needs to get to the fundamental root cause of this problem and address it as soon.”Spokespersons for the NNPC, Ndu Ighamadu, noted that the product has been deregulated therefore the dynamics of demand and supply determines the price.He stated that the corporation imports and sources the product from local refinery to balance demand in the market, stressing that the group remained a player and not sole importer of the product.
A consumer, Emmanuel Olufemi who said he bought the product for N260 per liter, decried the high cost, stressing that the family has mainly resorted to firework and charcoal for cooking.Another consumer, Susan Atebije noted that she bought for about N350 to complement with cooking gas.“Kerosene is the common man fuel. I don’t know why it has become so expensive and scare. The government has to do something about this,” Atebije said.
Like Olufemi, over 51. 40 per cent of Nigerians according to the World Bank reside in the rural area and depend on kerosene to cook or light their homes or opt for firewood due to the high cost of the product.While the figure of people cooking with firewood or charcoal rises, the World Health Organisation reported that over 470, 000 Nigerians have died in the past five years from firewood induced sicknesses.
A report published by a Non Government Organisation, Power for All, noted that over 66 per cent of households in Nigeria use kerosene for lighting and cooking, while the Nigerian Bureau of Statistics, added that the proportional use of kerosene by Nigerian households was 22.8 per cent for cooking and 57.8 per cent for lighting, mostly by the rural and peri-urban poor.While Nigeria is currently rated as the world poorest country according to Brookings Institution, , Power for All report indicated that spending on kerosene accounts for one the reasons the poverty figure will continue to soar as the poorest Nigerian household spends 8.7 per cent of household income on kerosene.