Overcoming the kerosine debacle

on   /   in Special Report 1:21 am   /   Comments

LIKE an old train couch, the year 2013 in a jerky swing but consistent style of each closing season of a year draws to a close.

But, in this in its last days, the average Nigerian household considers the numerous aspirations and wishes that are still pending and these must contend with the peculiar items of the ember-months. Ironically, one of such items which engages the mind of households in Nigeria at this season is a defiant culture of scarcity of two commodities that has become items of immense national value – kerosene and premium motor spirit popularly known among Nigerians as fuel.

For obvious reasons of the level of our national development and the place of prominence petroleum products have come to occupy in our national life, the availability of kerosene cannot be ignored in our economic planning, especially at a time as this. It is commendable that in recent time, the supply of kerosene has remained consistent compared with a past history of intense scarcity which sometimes cripples activities in homes and other sectors of the economy that rely on this arguably most influential of the more than 18 by-products of crude oil.

The long queue for expensive and unavailable kerosine...but when will this scarcitystop?

The long queue for expensive and unavailable kerosine…but when will this scarcity stop?

This stability, especially in supply of kerosene may not be unconnected with the reforms which the Nigerian National Petroleum Corporation, NNPC, has introduced in the sector specifically where it concerns kerosene. In the face of these reforms, the NNPC remains the sole importer of kerosene into Nigeria thus serving as a supplier of last resort. The implication of this is that as a supplier of last resort, the corporation does not enjoy a statutory obligation to directly distribute kerosene or any other petroleum product to the public, other than what it retails through the NNPC Retail stations.

As a matter of policy in line with global best practices, petroleum products, including kerosene are sold only to licensed marketers such as Independent Petroleum Marketers Association of Nigeria (IPMAN), Major Marketers, NNPC Retail and Depot and Petroleum Products Marketers Association (DAPPMA). This policy which has ensured that kerosene as a by-product has been available in the market, has also ensured the huge saving that the country has recorded in the much harangued subsidy of petroleum products business.

Statistics indicate that from a subsidy payment of N2.2 Trillion in 2012, the figure has plummeted to N971 Billion this year resulting to a saving of N1.2 Trillion or 56 per cent. Despite this national economic gains and government policy which pegged the price of a litre of kerosene at N50, the individual homes in Nigeria have not experienced the expected benefits due mostly to the activities of fellow Nigerians who see the huge market provided by the numerous uses of kerosene as opportunity for gains. While the NNPC stations enforce the N50 fixed price for the product, virtually other stations sell at prices above the N50 with some selling as high as N120 and above.

As identified earlier, kerosene has become quite lucrative because of the numerous uses to which it is put, apart from its place of choice as a cooking fuel in homes. Until recently when the Minister of Works, Architect Mike Onoliememen warned road construction companies to desist from the use of kerosene in road construction, nearly 26,000 litres of kerosene is used for every kilometre of road in the construction industry. Given its high quality, kerosene has become one of the most diverted products hence, it serves the aviation sector as Jet A1. Some more diverted Kerosene is used as a solvent in the manufacturing industry.

Unknown to many Nigerians, kerosene is a catalyst for the numerous illegal refineries that abound in most parts of the Niger Delta. The product is used to mix diesel daily and it has been nicknamed “rice and beans”, among these economic saboteurs. While petrol is mainly dispensed at the filling stations, the same cannot be said for kerosene as there are several peddlers of kerosene on the streets across the country and in a typical fuel station in Nigeria, kerosene is dispensed through surface tanks and jerry cans.

Perhaps one of the sustained reasons for the call of the removal of subsidy in the sector has been the voracious smuggling of kerosene by Nigerians across the expansive and porous borders of the country with its neighbours. A rather lucrative business, smugglers reap bountifully from their illegal activities on a daily basis. Some of the issues that have made it impossible for Nigerians to get kerosene at the official rate of N50 per litre are obviously beyond the control of the NNPC and requires the active participation of the various agencies of the state.

However, in a free market economy as Nigeria, some of the issues can only be dictated by the forces of demand and supply which in spite of government pegging the price at N50 per litre may require more than the savings from the subsidy programme to enforce.

Subsidy programme

In an effort to encourage local participation in the petroleum sector, Nigerians are encouraged to own and control segments of the market including retail stations. And the difference between the official price of N50 per litre and the predominantly N120 per litre sold in most filling stations only goes to show how patriotic or unpatriotic Nigerian businesses in this sector are.

While it is desirous that Nigerians could get this product at the official rate, it is pertinent to note that about two years ago, kerosene retailed for as high as N250 per litre in this country.   The present situation is indeed a gain over that past but this is not to say that the official rate of N50 per litre is unrealistic rather, it requires a combination of several layers of concerted efforts by stakeholders to make this happen, including the consuming public. Perhaps, the first place to start with is encouraging households in the country to adopt the use of LPG (Liquified Petroleum Gas) as a direct substitute to kerosene.

Sehinde Omoniyi , wrote from Abuja

    Print       Email