A Review of the Nigerian Energy Industry

Govt wastes funds on kerosene subsidy

22 August 2015, Abuja – Petroleum products’ marketers across the country have continued to ignore the directive of the Federal Government on kerosene price as they sell the product between N110 and N160 against the regulated price of N50 per litre.

Kerosene-queue-in-Dutse-300x173tThe Federal Government is paying N58.65 as subsidy for every litre of kerosene being sold in Nigeria, according to investigation by our correspondents.

Figures obtained from the Petroleum Products Pricing Regulatory Agency on Thursday showed that the Expected Open Market Price or actual landing cost of kerosene plus margins stood at N108.65 per litre.

This, however, was against the product’s regulated price of N50 per litre as stipulated by the government. This price is hardly adhered to by many filling stations.

One of our correspondents observed that most petrol stations in Abuja were not dispensing kerosene on Thursday, particularly those in the city centre. The filling stations in remote towns sold the product above the regulated N50 per litre.

It was the same story in Lagos, where few stations were found to be selling the product at N160 per litre.

At Kubwa, a satellite town in the Federal Capital Territory, an obscure filling station, which had no name and was located in Byazhim, sold the product at N90 per litre.

Some residents told our correspondent, that the management of the filling station hardly sold the commodity in small quantities.

It was learnt that petrol stations such as Oando, Conoil and MRS in Nyanya, Kubwa and Dutse never sold the product at N50 per litre.

Our correspondent however, did not see any of them dispensing kerosene on Thursday when he visited the filling stations.

“We hardly buy kerosene for N50 per litre,” a resident of Kubwa, Greg Tasie, said.

He added, “The only petrol station around here that sells at that price is the NNPC mega-station along the Kubwa Expressway. And most times, before you get there, they must have sold it out completely to people coming with hundreds of jerrycans to buy kerosene.”

While some stations in Lagos did not have kerosene to sell due to limited supply from the NNPC, the product was sold above N100 in most filling stations, with some stations selling at N160 per litre when one of our correspondents visited them on Thursday.

A top official of a major petroleum downstream player, with filling stations in parts of the country, told The PUNCH that the NNPC was supplying kerosene to them at N49.50 per litre.

The source, who spoke on condition of anonymity, said the price at which their stations were selling the product to the public varied between N105 and N107 per litre.

Commenting on importation of the product, the source said, “The NNPC does not bring in kerosene often. And when they bring it, it takes about six weeks before it gets to your turn. It is not something every marketer gets every now and then. Sometimes a marketer might not get for three months.

“Kerosene is not on the priority list like Premium Motor Spirit (petrol); its importation is just once in a while. If they bring in two vessels, which are about 70 metric tonnes, about 20 companies will be waiting to share it and this gives room for bribery and corruption.”

The Manager, External Affairs at Mobil Oil Nigeria Plc, Mr. Akin Fatunke, said, “They (NNPC) have been selling to us at N40.90 and we sell to the public at the regulated price of N50 per litre.

“Before now, we never had the product. As much as they give the product to us, we sell at N50 per litre at our stations. They sell limited quantity to us, not the demand that we expect. We sell what is given to us.”

The PPPRA’s pricing template for kerosene, based on the average Platt’s prices for August 18, 2015, shows that the actual cost of the product before being imported into Nigeria is N82.25 per litre, while its landing cost is put at N93.16 per litre.

A combination of costs for retailers, transporters, dealers, bridging, marine and administration charge came to N15.49 per litre. When this is added to the landing cost, an EOMP of N108.65 per litre is arrived at.

When contacted on the matter, the Group General Manager, Group Public Affairs Division of the NNPC, Mr. Ohi Alegbe, told one of our correspondents that there was still subsidy on kerosene.

“The President has not taken a decision on that. The new GMD has not taken a decision on that either,” he said.

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