A Review of the Nigerian Energy Industry

Kerosene price rises by 200%

Crashing_Kerosene_price14 July 2013, Lagos – The price of kerosene has risen by about 200 per cent in Lagos, Ogun states and other parts of the country largely due to the scarcity of Liquefied Petroleum Gas (cooking gas).

Though the official price of kerosene is N50 per litre, most marketers and retailers (with the exception of filling stations owned by Nigerian National Petroleum Corporation) have, before now, sold it at N100 per litre.

Checks by our correspondent on Friday, however, revealed that a litre of kerosene was being sold at N150, amounting to a 200 per cent increase over the official price of N50.

A five litre gallon of kerosene, which should be sold at N250 official price but was selling at N500, has now increased to N750, according to findings by our correspondent.

On why most marketers don’t sell kerosene at the official rate, a source at the Major Marketers Association of Nigeria, who asked not to be named, said, “NNPC is supposed to be selling kerosene at N40.90k per lie but marketers will have to part with some money. At least N30 per litre will be paid to government officials.

“This payment will entitle such a marketer to get the pro forma invoice. You will then hire a ship, incur the cost of the ship, storage and operational cost. That is why kerosene cannot be sold at N50, the control price.”

Experts had also argued that the increase in kerosene price would increase further if the cooking gas scarcity caused by the faceoff between Nigerian Liquefied Natural Gas Limited and the Nigerian Maritime Administration and Safety Agency was not resolved.

NIMASA had since June 21 barred NLNG cargoes from entering or leaving the loading bay at the Bonny Terminal in the Niger Delta region over non-payment of $158m levies.

The President, Nigeria LP Gas Association, Mr. Dayo Adeshina, said this had prevented the 9,000 tonne vessel (Gas Providence), which supplies liquid petroleum gas to the domestic market, from sailing and discharging products in Lagos.

He said this had subsequently led to an unprecedented scarcity of cooking gas in the country and expressed concerns that kerosene retailers could take advantage of the scarcity and increase their prices.

Analysts expect that many cooking gas consumers will naturally switch over to kerosene when they can neither find nor afford cooking gas, which has become very scarce.

The NLPGA president further noted cooking gas was no longer available at depots owned by the Pipeline and Products Marketing Company, Navgas and possibly NIPCO due to the NLNG/NIMASA feud.

Because the NLNG supplies 98 per cent of the cooking gas consumed in Nigeria, Adeshina lamented that the NIMASA blockade had led to scarcity of cooking gas across the country.

The prices, he reiterated, had gone up with a 12.5kg cylinder of gas selling between N4,000 and N5,000 in Lagos and N6,000 in Abuja. It was sold for N2,800 before the crisis.

He said, “None of the storage in Lagos has any cooking gas in their tanks. The situation started two weeks ago when the Bonny channel was blocked by NIMASA. Gas Providence, which supplies LPG to Lagos is being detained even when the owners have gone ahead to pay the statutory levies to NIMASA.”

The NLPGA boss wondered why NIMASA had continued to detain Gas Providence, the LPG vessel, even after its owners had paid the required statutory levies.

In view of hard times being experienced by consumers, Adeshina called on the Federal Government, National Assembly and other concerned stakeholders to wade into the matter so that the gas laden vessel meant for the domestic market would be allowed to sail.

He said, “We are calling on all the stakeholders involved to resolve the matter. This is affecting everybody because we need to cook. We cannot go back to the days of using firewood for cooking. Even if we decide to embark on importation, it will take about 25 days for the vessel to get to Lagos.

“The ongoing cooking gas scarcity is not due to hoarding or sabotage but as a result of continuous detention of the vessel that is meant to supply gas to Lagos.”

NLPGA Treasurer, Mr. Felix Ekundayo, warned that if nothing was done before the weekend ran out, the multiplier effect would be serious and the masses would be the most affected.

According to him, the only cooking supply into the country is coming from a refinery in Niger Republic and it is very insignificant because the refinery itself can only do three trucks of LPG per day.

NLPGA’s Deputy President, Mr. Nunu Yakubu, who corroborated this, said, “We don’t want it to appear as if we are giving legitimacy to the cooking gas from Niger because the gas has pressure issue.

“The Gas Providence has paid the statutory
fees and since regulation does not allow us to import cooking gas and there is no alternative, the only solution is to allow the vessel laden with gas to sail into Lagos.”

Although there were reports on Friday that the NLNG had agreed to pay the accumulated tax levies to NIMASA to pave the way for the resolution of the dispute, experts noted that it could take about a week for the gas scarcity to ease up.

– Punch.

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