High kerosene price: Avoidable albatross to Nigeria’s economic growth

By Sulaimon Salau
FORMER President Olusegun Obasanjo took the nation by surprise when he declared that he was unaware that kerosene price was higher than that of petrol. It is hopeful that the present situation will not be a replica of what Nigerians experienced during that regime.
Irked by the lingering scenario, concerned Nigerians have therefore appealed to President Goodluck Jonathan to intervene in what looks a no-end saga of kerosene price hike.
Dual Purpose Kerosene, otherwise known as DPK is a product that serves the household, particularly middle and lower class citizens of Nigeria. The scarcity of the product, which culminated into higher price has posed untold hardship on the livelihood of the consumers who found it tough to afford.
Efforts to normalise the situation through the major importer of kerosene, Nigerian National Petroleum Corporation (NNPC) and the petroleum marketers has proved abortive as they continue to trade blames, leaving the masses to the wraths.
As this lingers, consumers’ swift move to adopt alternatives like firewood and coal, the prices of these commodities have also been artificially hike. Where a liter of kerosene goes for N200 and five litters goes for N1000, a bunch of firewood costs N300, while a bag of coal costs N1500.
This represents a significant increase from the former price where Kerosene goes for N50 per liter, firewood N200 per bunch and coal N1200. Other alternative lies in Liquefied Petroleum Gas (LPG), popularly known as cooking gas and electric cookers. However, the problem of power supply has stalled the effective utilisation of electric cookers.
Having prolonged since January this year, the scarcity has spread across the country, leaving about 90 per cent of the petroleum filling stations out of stock. Instead the kerosene dealers, who now have an association have took over the market from the licensed dealers and manipulate prices to their taste.
Tensed with the uncomfortable situation, the stakeholders in the petroleum sector and the consumers have called for the intervention of Jonathan, whom they said should leave up to his promises by not leaving the masses to suffer.
As speculations begin to ripe on the real cause of the scarcity, some concerned group said the government may have secretly privatised kerosene, just like petrol and diesel, while others alleged that the NNPC has failed in its responsibility as the major importer of the product. The simple fact remains that the demand is higher than supply. Since our dilapidated refineries in Warri, Port Harcourt and Kaduna have stopped producing kerosene for a very long time, importation has also been inadequate.
A reliable source in the Nigerian Independent Petroleum Company (NIPCO), which does throughput arrangement for the NNPC, told The Guardian that the problem is caused by shortage of supply.
“We cannot rule out short of supply, although NNPC has been importing but I feel there is a shortage somewhere because if the product is enough, nobody will hoard it, and it will be duly circulated. You can imagine, the Independent marketers comprising of 16 companies are allocated only15,000 liters from the latest received cargo, so you can see it is a problem of shortage,” he said.
The marketers distanced themselves from alleged hoarding of products for profiteering, alluding the price hike to shortage of product.
The General Secretary of Independent Petroleum Marketers Association of Nigeria (IPMAN), Mr. Mikelyne Osatuyi said: “I can tell you categorically that IPMAN members don’t hoard  product, what do we stand to gain from hoarding, it is a deliberate suffering of Nigerians and we don’t engage in such act, IPMAN is a reputable association and we are committed to the welfare of the citizenry in terms of effective product distribution.
He equally agreed that there is a huge gap between demand and supply of the product. “The problem is that there is no enough supply, what is being imported is far cry from the demand, so, we have the responsibility to duly distribute what is being allocated to our members. It is unfortunate that government is paying so heavily on subsidy and yet the products are not available.”
Osatuyi maintained that it only the government that is importing, (NNPC is importing on behalf of government), because kerosene is not under reimbursement like petrol, so the marketers are totally out of the import schedule.
He said the importers needed to realise that the demand for kerosene is increasing, while the industries are equally using it for certain production processes, hence demanded for immediate increase in the import quota.     “IPMAN is calling on the government and the NNPC to kindly increase the supply of kerosene, so that it will be available at every nook and crannies of the country, and it will be affordable to Nigerians.”
Reacting to the allegations of inadequate supply, the NNPC has boldly dissociated itself from the situation, pushing the onus to the petroleum marketers.
The Group General Manager, Public Affairs, NNPC, Levi Ajuonoma in his numerous statement said, NNPC is committed to importing products that would meet the national demand. He sees no reason why the product should be scarce unless due to malpractices by marketers.
Early February, the NNPC pumped 37 million litres of kerosene into the market through its subsidiary, Pipelines and Products Marketing Company (PPMC).
The supply, which was claimed to be far above the national demand of 10 million litres per day, is to check the scarcity of kerosene, which has made cooking difficult for many families since the beginning of the year.
Ajuonoma then said the market was well supplied with kerosene and that there was no need for members of the public to resort to panic buying.
Not quite long, the corporation injected additional 50 million litres into the market. At that time, Ajuonoma revealed that 18 million litres of kerosene was loaded out of NIPCO for the Independent Marketers, 12.2 million litres out of Capital Oil for the NNPC Retail stations and 17.4 million litres were being pumped to Mosimi depot from Atlas Cove for onward supply to Ibadan, Ore, Ilorin and its environs.
After it was obvious that these supplies were not capable of rescuing the situation, the group came out with an allegation that marketers are engaged in sharp practices, thereby making the product unavailable at expected or designated points.
NNPC decried the situation, threatening to investigate them through the Department of Petroleum Resources (DPR).
“The nation’s refineries are working fine and producing kerosene. We give the marketers the same kerosene we are supplying the NNPC Mega stations. Very soon, the marketers will have to tell Nigerians what they are doing with the kerosene. This is a stern warning we are giving to the marketers,” Ajuonoma said.
The situation has, however, opened door for the opportunities in gas exploitation, as some consumers now see gas as a better alternative. A 25kg of gas is being filled up at N2,700 and the bigger cylinder costs N10,800 to be filled up.
According to Joseph Ozeigbe, “gas cooker is the best bet because what we are witnessing can be described as pure exploitation. This is a country where we claim to be practising pure democracy; where government claims to be caring for the teeming masses, yet, kerosene, an essential commodity for every household, tends to have gone beyond the reach of the common man.
It is a big shame. The Federal Government should act on time and arrest the situation by checking the excesses of the markers who are perpetrating this dastardly act.
The dealers hinged the price hike on the importers and depot operators, which they claimed ration the product allocation to various dealers.
Mr. Ayodele Ajayi, who is an independent dealer in Lagos, said kerosene is sold at N135 per litre from the depot, but the additional logistic charges made by the retailers automatically increased the price to about N200 per liter.
“It is not our fault, I can boldly tell you that the independent kerosene dealers are not happy with this situation, because it has equally affected our sales, the price was increased from the depot without any reason, so, by time we add the transportation and other logistics, it further go up,” he said.