A Review of the Nigerian Energy Industry

Depot owners identify products diversion as reason for kerosene scarcity

Kerosene queue at an NNPC filling station18 September 2014, Abuja – Some petroleum products depot owners in Lagos on Tuesday attributed the persistent scarcity of the Dual Purpose Kerosene (DPK) to diversion by majority of the marketers.

The deport owners in separate interviews said that the inherent huge returns from diverting the product was responsible for the development.

They said the huge profit had made most marketers to compromise the Federal Government efforts at providing kerosene for majority of Nigerians.

Mr Gabriel Simpson, Managing Director, Interland Petroleum Ltd., said that some marketers were also involved in high scale smuggling of millions of litres of kerosene across the borders.

According to Simpson, kerosene distribution still remains a major challenge in the country because it is on record that kerosene meant for the masses is diverted to other sectors or agencies to make more money.

“I have consistently and vehemently at every forum, informed Nigerians that petroleum products subsidy on DPK benefits only the rich to the disadvantage of the average man on the street.

“Since the government of late President Musa Yar’Adua, the confusion as to who pays subsidy subsists.

“NNPC has been bearing the burden of solely sustaining kerosene importation, petroleum marketing companies have refused to bring in the product due to the said uncertainty,” he said.

Mr Jubril Ibrahim, Managing Director, Triple-K Oil and Gas, also identified inadequate supply and lopsided kerosene distribution as another major driver of kerosene scarcity.

According to Ibrahim, in most instances supply from NNPC goes to depot owners whose main stock in trade is to make maximum profit and not targeted at filling stations where prices could be easily monitored.

“There are also allegations of money exchanging hands on per liter basis between the supplier (NNPC) and the depots that get the product.

“Although there is no evidence but it remains a strong fact behind the high price of the product from the depots.

“Marketers have also complained about bank charges as they are made to pay for the product in billions of naira weeks before the allocations are made by PPMC.

“Thus, increasing the cost of raising money by way of additional interest payment before the product is supplied,” he said

“We receive DPK once in a month and the maximum we get is 5,000 metric tonnes or about 6 million litres or 200 trucks of 33,000 liters each.

“The supply clearly is short of the demand of our registered marketers, especially Independent Marketers spanning over 6,000 outlets across the country.

“In most cases marketers usually overpay for the product every month and we have to first give them before others in subsequent supplies.”

Mrs Bolajoko Oludare, Taplox Oil Ltd., said that getting kerosene product above fixed price of N49.50 is a common phenomenon controlled by an alleged “mafia group.”

Oludare also alleged that some officials of NNPC and PPMC usually demanded for additional cost of between N15 and N20 per liter from marketers.


– Vanguard

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