A Review of the Nigerian Energy Industry

Panic grips marketers over NNPC kerosene allocations

Kerosene distribution in Anambra state17 February 2014, Lagos – Panic has gripped marketers who have been getting kerosene allocations from the Pipelines and Products Marketing Company (PPMC), a subsidiary of the Nigerian National Petroleum Corporation (NNPC), as the probe by the National Assembly on kerosene subsidy has forced the marketers to reduce the price they sell the product to middlemen.

The House of Representatives’ Committee on Petroleum (Downstream) has scheduled a probe on kerosene subsidy for tomorrow (Tuesday), a few days after the Senate Committee on Finance concluded receiving submissions from parties involved in the allegation made against NNPC by the Central Bank of Nigeria (CBN) Governor, Mr. Sanusi Lamido Sanusi, on the kerosene subsidy scheme, among other issues.

Apparently worried by the possible outcome of the probes, it was gathered that marketers, who get kerosene allocation from the PPMC at the official ex-depot price of N40.90 per litre and sell to middlemen at between N105 and N120 per litre, instead of N50 per litre, have reduced the price to between N88 and N90 per litre in recent weeks.

However, this has not translated to a reduction in the pump price as these third parties, who do not get direct allocations from the PPMC but from the independent marketers, are still selling at between N130 and N150 at the filling stations.

THISDAY gathered that the PPMC just allocated another kerosene vessel of 5,000 metric tonne-capacity, translating to about 210 trucks of kerosene to the independent marketers, which was recently discharged at the facility of Capital Oil and Gas Limited in Lagos.
Investigations have further revealed that marketers have been allegedly allocating the products to their members and cronies, who sell to middlemen at between N88 and N90 per litre, instead of taking the products to filling stations to sell at the official pump price of N50 per litre.
It was alleged that the marketers also shortchange themselves in the course of sharing the PPMC kerosene allocation.
For instance, the Ejigbo depot branch of the Independent Petroleum Marketers Association of Nigeria (IPMAN) was said to have rejected a four-truck allocation given to it at the weekend from the 5,000 metric tonnes allocated to the association by PPMC, because it said the allocation was too small to be shared by its members.

Both the National President of IPMAN, Alhaji Abdulkadir Aminu, and the National Secretary, Mr. Mike Osatuyi, were not willing to speak to THISDAY on the issue of kerosene allocation, despite several calls and text messages.

THISDAY however was informed by some of the independent marketers that PPMC officials responsible for the allocation of kerosene do not assign the product to them at N40.90 per litre, without other conditions attached to it.
“Independent marketers are made to pay kickbacks of between N12 and N40 per litre or to reallocate some of their official allocations back to some PPMC officials.

“That is why the marketers cannot afford to sell at the official price of N50 because of the money they spend to get the allocations. PPMC officials know that marketers are not selling at the official price but they keep on giving them allocations because of what the marketers pay unofficially,” one of the marketers told THISDAY at the weekend on the condition of anonymity.

However, THISDAY could not substantiate the allegation from independent sources and the spokesman of PPMC, Mr. Nasir Imodagbe, refused to respond to the issue when text messages were sent to him yesterday.

An industry source said a way out of the crisis of confidence caused by the kerosene subsidy scheme is for the federal government to deregulate the product or alternatively, allow private marketers to import and make subsidy claims like the NNPC, so as to end the current crisis, which was caused by the NNPC’s monopoly of importation.

It was also learnt that rather than get involved in kerosene distribution, some of the major marketers have increased their investments in the supply of other petroleum products such as petrol and diesel, as well as Liquefied Petroleum Gas (LPG) or cooking gas to increase their turnover and profitability.


– This Day

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