Govt ends kerosene subsidy, pegs price at N83 per litre

25 January 2015, Abuja  – The Federal Government, weekend, hiked the price of Household Kerosene (HHK) to N83 per litre from N50 per litre, thereby, officially ending subsidy on the product.

Kerosene queue

Kerosene queue

The Petroleum Products Pricing Regulatory Agency, PPPRA , in its product pricing template released, weekend, however, stated that the N83 per litre price applies only to the Nigerian National Petroleum Corporation (NNPC), meaning that other petrol stations and dealers can sell higher than the stipulated amount.

Curiously, the hike in the price of kerosene came at a time when the price of crude oil had dropped to record low, with the price of petroleum products, such as kerosene, fuel and diesel, among others, dropping significantly in a number of countries, like the United States.

This also brings to question, the recent reduction in the price of Premium Motor Spirit announced by the Federal Government and which commenced at the beginning of the year.

Again, the PPPRA’s template also showed that at N83 per litre, the Federal Government is making a gain of N10.72 for every litre, as it puts the Expected Open Market Price, which is the Landing Cost plus Total Margins at N72.28 per litre. The expected open market price is the prevailing open market rate for the product in Nigeria, after taking certain costs into consideration.

Giving a breakdown of the price, the PPPRA template put the Landing Cost of  the product at N57.98 per litre, while the total margin due for middlemen was put at N14.30.

Further breakdown of the Total Margins showed that retailers margin was put at N5 per litre; Transporters, N3.05 per litre; Dealers, N1.95 per litre; Bridging fund, N5.85 per litre; Marine Transport Average, N0.15 and Admin  Charges, N0.15.

 

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