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Controversy trails removal of subsidy on kerosene
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- Category: Society
- Published on Monday, 28 June 2010 03:44
- Written by Compass
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The unannounced deregulation of the House Hold Kerosene (HHK) has started generating controversy in some quarters as Petroleum Products Pricing Regulatory Agency (PPPRA) blamed the removal of the subsidy on the product on Nigerian National Petroleum Corporation (NNPC), which has been the sole importer of the kerosene.
While PPPRA, which is the body empowered to regulate the prices of petroleum products, maintained that the subsidy on kerosene had been removed following NNPC’s request for it due to its financial burden on the corporation because of the high cost of import, NNPC insisted that the subsidy was still in place.
The price of kerosene, which was officially at N50 per litre at the retail outlets as the Federal Government had pegged the ex-depot price at N40 per litre, is currently N119 per litre without any official ex-depot price, going by PPPRA template.
This development did not go down well with some Nigerians who believed that kerosene was the only petroleum product the low income earners in the country enjoyed for lighting their houses and cooking their meals.
They stated that removing the subsidy on the product would further increase their hardship.
An official of PPPRA, who requested for anonymity, said: “NNPC is fully in charge of HHK. The removal of the subsidy was caused by the corporation. In fact, it has nothing to do with us. If you want to know what has happened to kerosene, go and ask NNPC.”
But the Group General Manager, Public Affairs of NNPC, Dr. Levi Ajuonuma, in his reaction, refuted the subsidy removal, insisting that the subsidy still stays.
Ajuonuma said: “Thank you for finding time to cross check your facts with us before going to press. As at today, the subsidy on House Hold Kerosene (HHK) has not been removed contrary to your assertion. Since your follow-up questions are based on the assumption that the subsidy has been removed the answers to the questions have thus been provided.”
He said it was not the responsibility of NNPC to regulate the price of petroleum products, including HHK, denying that the corporation never made any such request to PPPRA.
In the template of PPPRA, only Premium Motor Spirit (PMS), commonly called petrol, is regulated with Pipeline and Products Marketing Company (PPMC) ex-depot price pegged at N55.90 per litre and retail price at N65 per litre, while other products like Automotive Gas Oil (AGO), HHK, Low Pour Fuel Oil (LPFO) and Aviation Turbine Kerosene (ATK) have been deregulated.
Minister of State for Finance, Mr. Remi Babalola, while admitting the removal of subsidy on kerosene, said the Federal Government realised that the people who were supposed to enjoy the benefits of subsidy were not even the ones enjoying it, as other people queue up with gallons at filling stations to buy kerosene and sell the product at a very high price to the consumers.
Babalola said: “Most people that are supposed to be enjoying the benefits of subsidy are not even enjoying it. For instance, you see people queuing up with gallons at filling stations to buy kerosene; and when you get to their houses, they have tanks where they dispense it at a high price.
“They buy at a subsidised rate and sell at an exorbitant rate. That is not productivity. The whole essence of the economy is to make it more efficient and effective; that resources are found where they are best utilised.”
“So if you see that you are not making the best use of the subsidy, you remove it. The question you need to ask is: who are the people that are benefiting from the subsidy? Are there better ways to manage this?” Babalola queried.
Following the removal of subsidy on kerosene, many marketers have embarked on importation of the product, which was exclusively done by NNPC, and selling it at their retail outlets at a price between N90 and N119 per litre without any recourse to obtain any subsidy from the Federal Government.
A source at Oando equally admitted that the company had been sourcing the product externally, which it had been selling at N90 per litre, a price that would enable it recoup investment.
