28 November 2013, Abuja – There are indications that the Federal Government will stop kerosene subsidy in 2014 bringing to an end a scheme that has been widely criticised as corrupt and controversial.
Our correspondent learnt on Wednesday that no provision was made for kerosene subsidy in the N4.77tn 2014 budget proposal presented to the National Assembly by President Goodluck Jonathan.
Ministry of Finance sources, who gave the hint, said the budget proposal did not make any provision for kerosene subsidy.
The Federal Government spent N634bn to subsidise the retail price of kerosene in the past three years.
The Chairman, House Committee on Petroleum (Downstream), Mr. Dakuku Peterside, who recently condemned this as wasteful spending, also said N110bn was spent on kerosene subsidy in 2010, N324bn in 2011 and N200bn in 2012, which came up to N634bn in the three years.
He said, “In the year 2010, we spent N110,068,533,988 to subsidise kerosene. This is not the cost of kerosene but the cost of subsidising the product alone. In 2011, it got worse and the government spent N324,089,961,319 on kerosene subsidy. Although we have yet to reconcile this, we spent N200bn in subsidising kerosene in 2012.
“So, in three years, we have spent N634bn subsidising kerosene. This is one third of what we spend in a year on capital budget.”
Despite the huge spending on Kerosene subsidy, the masses could not, until recently, buy the product at the regulated price of N40.90k per litre.
They had settled for alternative sources of energy such as firewood, charcoal, sawdust, electricity and gas.
However, this has recently changed as the Nigerian National Petroleum Corporation, through the Independent Petroleum Marketers Association of Nigeria and the Depot and Petroleum Products Marketers Association, has been selling kerosene at N50 per litre.
Commenting on this, the President, Nigerian Liquefied Petroleum Gas Association, Mr. Dayo Adeshina, said it would be a welcome idea if kerosene subsidy could be stopped by the government.
He said, “Government needs to take a conscious decision to drive a mass shift from kerosene to LPG as it was done in Indonesia. The Indonesian government took a conscious decision to stop kerosene subsidy, which was gulping $9bn a year. They found that they would only need to invest $2bn in cylinder and cooking stoves to save $7bn.
“We need to get to that level when we will consciously shift from kerosene to LPG and that can only happen with the right government policy.”
Adeshina argued that the N634bn spent on kerosene subsidy had little impact on the masses, saying it enriched only a few people.
– The Punch