Zik Gbemre
With all the present administration’s effort to make kerosene available to Nigerians, the product seems to be beyond the ordinary people. For over a decade now, Nigerians have been grappling with the problems of shortage of kerosene (also known as Dual Purpose Kerosene-DPK), and the high cost of the product when available. The same experience is on ground presently.
Kerosene happens to be the major cooking fuel in millions of Nigerian families. Many also use it to light up their homes. Though the official price of kerosene, according to Nigerian National Petroleum Corporation (NNPC) officials, is N50 per litre, it has never sold for less than N120 per litre, both in and out of season. Indeed, sometimes it costs between N150 and N250 per litre. Most saddening, perhaps, is the official claim that the Federal Government is subsidizing kerosene importation.
This ever-present nightmare of Kerosene scarcity is being observed in the oil city of Warri, Delta State. It was on September 18, 2014, when a newly constructed NNPC Mega-filling Station along Airport Express Road (opposite Water Board), was besieged by a bee-hive of people seeking to buy Kerosene that obviously was never enough. The pictures attached to this write-up clearly show the levels of suffering majority of Nigerians are made to pass through just to get Kerosene that is never there.
We can imagine the frustration of people, who having stood under the scorching sun almost throughout the day, are made to go home with their empty jerrycans due to unavailability of the petroleum product. Let us also bear in mind that the attached picture is just one, out of the many filling stations across Delta State and different parts of the country where Kerosene scarcity has become a ‘normal’ thing for the average Nigerian masses.
Nigerian National Petroleum Corporation (NNPC) has declared that there is supposed to be enough Dual Purpose Kerosene (DPK) in circulation. In many filling stations across Nigeria, where this product is dispensed however, there exists, long queues of kegs.
The daily demand of Dual Purpose Kerosene is estimated to be between eight and ten million litres. What is currently obtainable is put at less than five million litres. This is, however, elusive because of the low output of the nation’s refineries forcing Nigeria to import the product in order to supplement consumption.
But while the price of kerosene escalates, the major players in the industry, including the Pipelines and Products Marketing Company (PPMC), the Independent Petroleum Marketers Association of Nigeria (IPMAN), and the Depots/Petroleum Products Marketers Association of Nigeria, have continued to trade blame over the ever-present crisis. It was alleged in some reports that the PPMC is not adhering to the 60:40 distribution ratio between IPMAN members and depot owners, but the PPMC had denied this, a source said. The hiccups in the fuel markets lingered because it has not been fully deregulated and government’s stronghold on the supply base only makes matters worse.
A subsidy regime that predicates local pump price on prevailing global oil price is prone to abuse and graft. Why is it difficult for the Federal Government to ensure local production of the product?” The source retorted. At the root of the kerosene scarcity is the domineering role of government, which discourages private sector investments and initiative. Currently, NNPC is the sole importer of the product, while refineries that refine kerosene have either shut down or are operating below capacity. This further underlines the need for private sector participation in petroleum refining business. It makes no economic sense to continue to import kerosene and other petroleum products when we are a major oil producer.”
It is untenable that low income earners already buffeted by high cost of living are being forced to spend more on kerosene or resort to fire wood with all its implication for the environment,” he disclosed. Part of the fallout of the scarcity is the rampant felling of trees to make charcoal and firewood.
Most homes across the country, including urban cities, have taken to using charcoal as alternative cooking fuel, putting a question mark on the viability of the Federal Government’s ‘Plant-a-Tree’ campaign aimed at protecting the environment. The smoke emanating from burning charcoal and firewood is known to be injurious to health. There are also reports of adulteration of kerosene, a dangerous and sometimes explosive mix that has already claimed lives in some states. Kerosene scarcity should be an embarrassment in Nigeria, the world’s sixth largest exporter of crude oil.
Let us imagine this; Nigeria holds a hundred and eighty seven trillion cubic feet (187tcf) beneath its 960,000sq km of landmass. This volume is more than a third of the continents 494tcf and the 7th largest reserves on the planet that is huge! Yet, our women, especially those in the rural areas, daily have their eyes smoked as a result using firewood to cook; Nigerians have not been able to experience steady power supply and the Nigerian economy is still driven by generators; and so on. Still on the use of firewood to cook, there is also the issue of deforestation that is caused by the use of trees for domestic cooking. Not to mention the use of kerosene that has led to the untimely deaths of many due to adulterated products of kerosene. So many issues suggest that Nigeria, rather than use the abundant natural gas reserves it is blessed with to make life more easier and livable for its citizenry, is still struggling to attain relevance in global index of developing nations.
It was only last August that the NNPC had reassured Nigerians that it was doing everything it could to make sure there was no scarcity of kerosene and liquefied petroleum gas (LPG), also known as cooking gas. Acting Group General Manager (Public Affairs Division) of the corporation, Tumini Green, was quoted as saying that the NNPC, through the PPMC, supplied between 10 to 11 million litres of kerosene daily; which were distributed through licensed marketers as against the 8 million litres said to be the national daily consumption level.
But notwithstanding the huge supplies, however, the NNPC claimed it was surprised that only its retail and a few other outlets sold kerosene at the government approved price of N50 per litre. It accused other marketers who were supplied the product from PPMC at government regulated price of N40.90k of selling above the recommended price; and indicted oil sector regulatory agencies for purportedly failing to fix the price of kerosene and enforcing compliance in line with government approved prices. The corporation equally claimed that it had been sanctioning oil marketers and vessel owners suspected of involvement in sharp and corrupt practices.
But the foregoing is viewed as mere buck-passing, as the rot continues unabated. At a recent forum of stakeholders in the country’s downstream oil industry in Lagos, it was pointed out that kerosene meant for the Nigerian public was being diverted to the pharmaceutical, aviation, road construction and manufacturing industries. The monitoring of the distribution chain of the product was also faulted, as well as the so-called subsidy on kerosene, which benefits only the rich as against the average Nigerian.
The stakeholders revealed that since the era of the late President Umaru Yar’Adua, when they said confusion set in as to who should pay subsidy, the NNPC had been bearing the burden of solely sustaining kerosene supply to the Nigerian market because marketers refused to bring in the product due to subsidy payment uncertainty. It was likewise suggested at that forum that the Finance Minister and Coordinating Minister for the Economy, Dr. Ngozi-Okonjo- Iweala, had not paid subsidy on kerosene to the NNPC for about three years, an indication that Nigerians are probably not being told the whole truth about the real cause of kerosene scarcity and the consistently high cost of the product.
It is for these reasons and more that kerosene scarcity and its exorbitant price in the country are viewed as man-made. It has become obvious that the NNPC and its subsidiary, the PPMC, cannot guarantee regular kerosene supply and at the official price. It is not just about the PPMC. It is a corporate failure. Indeed, as has been alleged in some quarters, it is not unlikely that fraudulent allocation of kerosene to incompetent and fictitious marketers, with NNPC and PPMC officials as accomplices, is part of the problem. That is why the National Assembly should wade into this endless debacle and unravel what is truly happening, in the interest of Nigerians.
Besides, the NNPC’s strangle hold on kerosene importation should be liberalised to make room for other importers and marketers to come in. Since the nation’s refineries are comatose, there is no guarantee that NNPC’s role as the sole importer of kerosene has not been compromised. Nigerians are passing through harrowing experiences daily as a result of the scarcity and high cost of kerosene. Many have reverted to the primitive era of using fire wood, charcoal and saw dust as cooking fuels. The situation is not just embarrassing; it is patently retrogressive for a country that prides itself as the 6th largest producer of crude oil, globally.
We consider it as an abnormality that Nigeria, with a population of over 160 million, and is blessed with abundant oil and gas resources, is still facing the woes of “refined petroleum product availability.” Reasons for this have been traced mainly by stakeholders in the oil and gas industry to the continued comatose nature of the nation’s four refineries.
Let us reiterate here that the importance of doing everything possible in ensuring that Nigeria is able to refine all of its crude oil and natural gas produce to satisfy both domestic demand and for exports, cannot be overemphasized. Aside the fact this will earn more revenue for Nigeria, it will also address all the ‘headaches’ created by ‘subsidy’ on petroleum products and will also make Nigeria less dependent on imported petroleum products. But to actualize this, it is imperative for the NNPC to realize that maintaining the four refineries in the country will not be enough to guarantee that Nigerians enjoy steady supply of petroleum products.
In fact, even with the four refineries working in full capacities (which are most unlikely), satisfying domestic demands will still be a struggle, not to mention having petroleum products for exports. On several occasions, we have witnessed the NNPC and its GMD coming forth to reassure Nigerians that it is making plans to revive the nation’s ailing refineries to improve availability of petroleum products. One time, a former NNPC GMD, Alhaji Mohammed Barkindo, expressed his regret to the House of Representatives Committee on Petroleum (downstream) during his tenure, that the nation’s refineries were still not optimally in spite of the huge sum of money sunk into them through Turn Around Maintenance (TAM). The then GMD also said he was concerned over the high cost associated with importation of Petroleum Products.
With the world’s current overcapacity for refining petroleum, which includes Kerosene, local refineries face strong competition in an increasingly open market. A private sector run refinery can operate uninhibited by the lethargic and inefficient nature of public sector institutions both in cost, efficiency and transparency. The facts are that transparent and robust privatisation of these refineries will raise government revenue, conserve foreign exchange, decrease vulnerability to imported petroleum products, reduce Kerosene and fuel cost, increase employment and reduce corruption in the petroleum sector. There are overwhelming evidence which indicates that the private sector has served the Nigerian public and stakeholders better than government-owned and operated facilities and parastatals.
To this end, we urge the Federal Government and the Ministry of Petroleum Resources to intensify current efforts in making the existing refineries to function to their optimum built-in capacity by involving the organized private sector, and encourage the building of more refineries in the country. This arrangement should be a Public-Private Sector Partnership arrangement that is transparently carried out, to serve as a permanent solution.
Like we have always reiterated before now, in the same line, the Federal Government should, more importantly, compel the existing (exploration and production) IOCs, as well as indigenous oil and gas companies in the industry to refine at least, half of whatever crude oil or natural gas they produce. These IOCs and indigenous oil and gas companies should have refineries (plants) beside their production facilities, to refine natural gas and crude oil, which will bring about Kerosene availability for domestic use in the country and for export purposes. Besides, they will also benefit immensely from the huge profit that will be abound.
The bottom line is that the government is not doing enough despite its claim of availability of the product in stock. Department of Petroleum Resources (DPR), which is supposed to make the required little effort by the government to be felt, is inactive in its duty to bring marketers who allegedly hoard the product to book. Marketers, in the same vein, should denounce being put under the cover of anonymity to name who they think is culpable for the persistence scarcity of kerosene.
