Nigeria’s outrageous spending on kerosene subsidy

Facts have emerged that the Federal Government has spent about N634 billion to subsidies Dual Purpose Kerosene (DPK) in the last three years.

For some observers, this sum is outrageous by all standards because the country has what it takes to refine the product. If the four crippled refineries are resuscitated the country would not be spending this much.

Oil marketers said they would not touch the product with a along spoon unless its price is deregulated.

This figure, which was disclosed by the Dakuku Adol Peterside, chairman, House Committee on Petroleum (Downstream), equates the amount to one third of the nation’s expenditure on capital projects in a year.

Peterside, who berated this huge expenses, at the seminar organised by the Lagos Chamber of Commerce and Industry (LCCI) in Lagos said the purported subsidy has never benefited the masses, which has hitherto been suffering to get the product at regulated price, noting that the amount was spent between 2010 and 2012, adding the breakdown of the figure to about N110 billion spent in 2010; N324 billion in 2011; and N200 billion in 2012.

According to him, kerosene may continue to be scarce due to critical factors such as non-functional refineries, vandalism of crude pipelines, corruption and the multi-purpose usage of kerosene, that have eaten deep into the fabric of the Nigerian society.

He said kerosene is equally useful for other purposes such as road construction; aviation fuel; cleaning agents; paint industries, anti-oxidant; solvent to adulterated crude oil for fuel; in addition to diversion to neighbouring countries and inefficiencies and fraud in the distribution network, among others.

This stiff competition for usage, according to Peterside has necessitated diversion of the product to other uses, because of huge turnover and excess profit.

Kerosene is expected to be sold for N40.90k per litre, but it is presenting sold between N110 and N150 per litre, depending on the location. In fact, the product is relatively scarce at the filling stations, thereby leaving Nigerians to other alternative sources, such as firewood, charcoal, sawdust, electric and gas.

Apparently irked by the situation, Peterside clamoured for a switch to Liquefied Petroleum Gas (LPG), which he said is clean energy that reduces environmental cost and degradation.

He therefore enjoined governments at all levels to promote the usage of LPG as cooking gas, proving that the subsidy spent of kerosene over the years has not helped matters.

He quoted the Nigerian National Petroleum Corporation (NNPC), as having said that it supplied about 2.92 billion litres of kerosene to the Nigerian market from September 2012 to August 2013, but the product was not available in the market.

By: Olusola Bello