Diversion of kerosene to the aviation sector and hoarding by unscrupulous marketers force the price of the product to go skywards
| By Anayo Ezugwu | Sep. 30, 2013 @ 01:00 GMT
THE on-going scarcity of kerosene and the attendant high costs in Nigeria, may linger than expected. The regulatory agencies don’t seem to have any solution for now. Although the regulated price of kerosene is N50 per litre, most filling stations sell it at between N130 and N160 per litre. For instance, a five-litre gallon of kerosene is sold at between N700 and N750 instead of N250 which is the regulated price.
Isioma Ogana, a businesswoman in Lagos, is one of those not happy with the high cost of kerosene and wondered why filling stations would be selling the product above the recommended price. But, the agonising aspect of the problem is that the product is hardly available at filling stations. The scarcity of kerosene has forced many consumers to depend on black marketers for their supplies.
“This is frustrating. Kerosene is an essential commodity; it is central to our living as Nigerians and it surprises me that the government allows us to pay the high price even when the product is available. I prefer to buy from the black market because if you buy a five-litre gallon from them, you know its five litres rather than buying from the filling station where they cheat you,” Ogana said.
Angelina Kelechi, a public servant in Lagos, is another person who is not comfortable with the situation. Kelechi could not recall when last she bought kerosene from a filling station because she has been depending more on the black market. “I found it annoying that you buy kerosene at almost the same price that you buy at the filling station,” she said. She urged the government to address the problem so that kerosene would be available and affordable for the people.
Realnews investigations at many of the filling stations have confirmed that kerosene is scarce and sold above the regulated price. At the NNPC filling station at Iba, Ojo local government area of Lagos state, there was no kerosene. One of the pump attendants said the product had not been supplied to the depot in the last five months. Efforts to get the NNPC to react to the allegation failed.
Diezani Alison-Madueke, minister of petroleum resources, at a town hall meeting in Lagos recently, said the marketers should be held responsible for the scarcity of kerosene, which has seen the pump price jump from N50 per-litre to over N160 per-litre in some states of the country. She said because the bulk of the kerosene imported into the country was of the same quality as that used in the aviation industry to fly airplanes, marketers who get allocation from the NNPC, the sole importer of the product, were into sharp prices, diverting the product to airline operators.
According to the minister, it was easy for the marketers to make huge profits from the sale of the product to aviation operators because the cost of kerosene in that sector was deregulated, and so they could sell at prices above N50 per litre, which is the regulated price for the kerosene consumed in homes. “Some operators are taking the kerosene meant for the filling stations to the aviation industry where they are making more money. This is a fundamental problem and we are trying to get it resolved,” she said, adding that government would effect changes in the leadership of the regulatory agencies like the PPPRA and DPR to deal with the issue and assured that it was just a matter of months before the culprits are caught and the whole fraud terminated.
Alison-Madueke said the option has always been to add colour to the kerosene sold in the local market so that it could not be spotted out quickly if diverted to the aviation industry. But she added that the fear was the possibility of contaminating the product in the process of adding the colour and hence creating more havoc in the sky if it finds its way to airplanes.
“I had to stop the colouration of the kerosene because I was afraid it could still go to the aviation industry and if used could cause problems in the sky,” she said.
Nasir Imodagbe, head of media relations, Pipelines and Products Marketing Company, PPMC, said that the hoarding of kerosene by oil marketers was responsible for the high price. He said that government was making available enough kerosene at affordable price. According to him, “our findings show that only the NNPC and a few outlets sell kerosene at the government approved price of N50 per litre. Petroleum products marketers purchase the product from us at the regulated price of N40.90k. By law, kerosene is not supposed to be sold above N50 to Nigerians,” he said.
Imodagbe stated further that it was the duty of the Department of Petroleum Resources, DPR, to enforce compliance with the government approved price. He said the PPMC was supplying about 11 million litres of kerosene daily which were allocated to licensed marketers and the NNPC retail outlets. “We at the PPMC have been ensuring that allocated petroleum products reach their designated points and the consumers. But, the cost of kerosene is high in the market because some oil marketers are hoarding the product. They are also inflating its price, thereby undermining government’s efforts at making life worthwhile for the common man.”