06 February 2014, Abuja -Executive Secretary of Major Oil Marketers Association of Nigeria, MOMAN, Mr. Obafemi Olawore, in this interview said lack of policy clarity on the importation of kerosene for domestic use has hindered its members from importing the product into the country. He therefore urged policy makers to promote LPG usage.
Your members have refused to import kerosene for domestic use, why?
There is lack of clarity on the whole policy. So for major marketers to come in, there must be clarity. There is no clarity at all. Let’s go back to history, about three, four or five years ago. There was a policy that kerosene has been deregulated, in other words, there is no subsidy. That is to say you will import it, sell it and make a reasonable magin, not cut throat. That is what we understand it to be. That was a policy issued by president Yar’ Adua.
However, some officials in government tried to change that policy. So the confusion now came up, kerosene price was now pegged at N50 as the selling price. So there is a contradiction. If it is deregulated, why do you fix a price? Whereas there was a paper for deregulation but there is no paper to say that it has been reversed.
Instead there is a paper that said the price is N50 and don’t go beyond N50. With this confusion, no major marketer ever imported and will ever import kerosene to sell, we won’t. Because if we import and government tells you that the subsisting circular said you should sell at N50, the whole process will be criminalised if you sell at more than N50 and whereas when you import, even the landing cost alone is more than N50, so there is no way you can come down and sell at N50 if subsidy is not paid.
I can confirm to you that Petroleum Products Pricing Regulatory Agency, PPPRA, when president Yar’ Adua was still around never processed NNPC claims, they did not. In other words, PPPRA as at that time never paid kerosene subsidy.
However, there was an interregnum between the other time and the present PPPRA. That period, PPPRA then processed some claims by NNPC for payment. Whether it was eventually paid or not by Ministry of Finance, I don’t know because I am not in the finance ministry and none of my members made claims for it because we never imported.
So the situation now is, major marketers will not import kerosene and sell at a loss, major marketers will import kerosene when the policy about the product is made clear. I repeat; you cannot on one hand say there is deregulation and you don’t give a letter to that effect and later go and fix the price for N50, there is a contradiction.
Until that contradiction is resolved, we are not going to come in and import. Major marketers will only import the aviation kerosene and sell as aviation fuel. NNPC is the one that imports kerosene and NNPC is the one that should answer whether they are paid the subsidy or not. As far as we are concerned, we have not made any claims because we did not import.
It was mentioned that FG spent N685trillion on kerosene subsidy in three years, who was the money paid to?
Dakuku Peterside’s figure may be right if he has proof. I’m not saying that he is wrong. He could be right, but I’m saying that the right place to go and confirm that is three places. First, go and ask NNPC whether they made any claims for kerosene they imported, go and ask PPPRA if they processed any claims for NNPC on kerosene and ask finance ministry whether they paid subsidy for kerosene for this period, not me because my members never imported, I won’t lie.
Which means the House of Representative is going ahead to confirm whatever figure Dakuku may have rolled out to the public. So as far as am concerned, for now everything is in the realm of conjecture, but what I can tell you as a matter of fact is that, no major marketer has imported and no major marketer has made claims.
The other earlier part was based on the fact that I was a member of the PPPRA Board, so I have some insider information, but the truth of the matter is there is confusion in the policy and that confusion must be cleared.
The way forward
If you ask me the way forward and I think you should be interested in that. Government should deregulate kerosene as a matter of permanent policy and the objective of this statement is to clear any doubt in the mind of anybody that kerosene is deregulated, so that other players will be able to import.
When you are talking about kerosene deregulation, nobody is buying it at N50, because there is only one importer, that is why there is so much pressure on the price of kerosene. If NNPC import, MOMAN members import, Independent Marketers import, the price will come down.
As at today, only NNPC import and they give it to those they feel like giving it to and quote me “No supply of kerosene has been made to any major marketer at Apapa facility in the last two and the half years.
We must demystify kerosene and I’m choosing my words clearly; “We must demystify kerosene”, kerosene is not a product that should carry all this mysteries about itself.
How do you demystify kerosene? We must encourage the use of LPG. The world over, LPG is used for domestic cooking not kerosene. It is only in Nigeria and not up to 10 countries in the whole world that make use of kerosene for domestic cooking. So we should encourage the use of LPG.
If there is any subsidy that is coming, we should subsidise the production of the cylinders not the product. We should encourage the manufacturers of the cylinders locally. It is a shame that the large plants built at Ibadan and Abeokuta are dead, we should encourage them. If we encourage them and they begin production of LPG cylinders, the cash given to them should not be free.
They can give them at little or no interest, we finance them so that they can commence production of cylinders in order for the common man, if there is any can be able to buy cylinders at affordable price, otherwise government should distribute cylinders through LPG Association, through major marketers, government can get cylinders to the households in Nigeria and at cheaper rate.