Nigerians groan under incessant increase in the prices of kerosene and diesel
Femi Otedola, chief executive officer, CEO, Zenon Petroleum and Gas Limited, has quite a challenge keeping his promise to make kerosene affordable to the average Nigerian. In October 2008, during the administration of late Umaru Yar’Adua, former Nigerian president, he started a N50-per-litre dual purpose kerosene, DPK, campaign, claiming that the move was to sustain availability and eliminate adulteration. He also promised to ensure easy access to safe, non-contaminated kerosene. But three years after the promise, the price of kerosene has skyrocketed.
Consumers of the product started noticing a hike in the price of kerosene early January but concluded that it may be a fallout of the scarcity occasioned by the festive period. But two months after, the price of kerosene has remained high. In some parts of Lagos, the price varies. While some filling stations sell at N120 per litre, others sell for between N125 and N130 per litre. In Abuja, the Federal Capital Territory, FCT, kerosene now sells for between N140 and N160.
Most consumers have thus been groaning under this huge price burden. “People no longer patronise me like before due to the change in price of the commodity. Now that I buy a litre for N120 and sell a bottle for N120, most of my customers have resorted to using firewood and charcoal,” says Lolade Awoyemi, a Lagos-based housewife, who went into the sale of kerosene to augment her housekeeping allowance. For Kemi Olawunmi, another housewife, there is no alternative to kerosene, “because I cannot injure my health by using charcoal, which is what happens when you keep exposing yourself to such items.”
His lamentation on his website recently, would have sounded exaggerated, but Nwachukwu Egbunike, must have summed up other people’s feelings when he claimed, “for a month now, I could not get kerosene to buy.” He added that “don’t ask me what I have resorted to in its absence, because perhaps my landlord may read this and summon me for a drilling.” While that sounded pathetic, it did not remove the import of the statement that many Nigerians are, indeed, groaning under the incessant hike in the price of kerosene.
Nigerians who use diesel to power their generators and vehicles are also agonising over the current price of the product. The high price of diesel is taking a huge toll on manufacturers who have to contend with high production costs. For instance, the Manufacturers Association of Nigeria, MAN, recently stated that its members spent N37 billion on diesel yearly. While breaking down the amount, Reginald Odia, chairman, Infrastructure Committee, MAN, said members of the association utilise 8.68 million litres of diesel weekly to run their generators, while N955 million is being spent on maintenance monthly, adding that N3.12 billion is spent on fuel costs. In all, he said a total of N49,038 billion is spent for both maintenance and purchase of diesel.
Indeed, studies have shown that the cost of running a power generating set in a consumer goods company makes up about 30 per cent to 45 per cent of its production cost. Temitope Ogundokun, head of communications, Lafarge WAPCO Cement, had told the magazine that the increase in price of diesel was having a negative impact on the distribution chain of the company as it added to the cost of logistics. Joseph Makoju, chairman, Cement Manufacturers Association of Nigeria, CMAN, expressed similar concerns. According to him, “the price of diesel has been up for three months. We have taken the matter up with Pipeline and Product Marketing Company, PPMC, and this government agency has said it would do something about the problem.”
But what exactly is the problem? Why is there increase in the prices of both kerosene and diesel? Andrew Obaje, director, Department of Petroleum Resources, DPR, explained that the scarcity of kerosene might be connected to the inability of marketers to import kerosene into the country. A marketer who wants to remain anonymous told the magazine that at the moment, importation of kerosene is minimal and the reason is obvious. “Bringing kerosene into the country is not worth the trouble. We gain little profit from it, and we are also finding it difficult accessing loans from banks to carry out our business,” he said. Just like him, some other marketers are complaining that accessing funds to import kerosene is a Herculean task.
Adeniyi Adeleke, chief executive officer, Olive Petroleum and Gas, could not specify why the price of diesel is on the high side. “Some of the marketers are complaining of not having enough supply. Some are saying the crisis in the Middle East is affecting distribution, while some others are attributing the problem to the present political situation in the country,” explained Adeleke. He is particularly irked that every week, the price of diesel keeps rising. “Last week, a litre of diesel at the depot sold for N142 per litre. Yesterday, it was N148 at the depot, and today, it has risen to N152, by tomorrow, we don’t know how much it will be sold,” he lamented. At the filling stations, the price varies. While some sell at N155 per litre, others sell at between N160 and N162. In Abuja for example, it sells for N155.
The Independent Petroleum Marketers Association of Nigeria, IPMAN, worried about the current constraints faced by its members in accessing petroleum products at depots for loading and distribution to consumers in parts of the country, last March signed a memorandum of understanding, MoU, with Capital Oil and Gas Industries, a leading player in the Nigerian downstream petroleum industry for supply and distribution of petroleum products. The partnership, says Musa Mohammed, IPMAN’s national president, “is to ensure even distribution of petroleum products across the country with a view to crashing the price of kerosene, which currently stands at N120 to N130 per litre.” He added that his members were not satisfied with the services of Nigerian Independent Petroleum Company, NIPCO.
In other to put a stop to the scarcity and hike in the price of kerosene, the Nigerian National Petroleum Corporation, NNPC, through PPMC, claimed it had injected 50 million additional litres of kerosene into the market. Levi Ajuonuma, group general manager, Public Affairs Division, NNPC, 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. “I want to assure consumers of household kerosene across the country that the NNPC has injected more than enough of the product into the market and they should desist from panic buying,” said Ajuonuma.
Much as his advice is cogent, there are indications that some Nigerians are already storing the products at home, which may cause havoc. Some others are adulterating the products to make more profit. Investigations reveal that more people have resorted to usage of firewood, thereby causing deforestation, which damages the environment. Yet, in all of these, the issue of the state of our refineries is one to worry about. At the moment, the three refineries at Warri, Port Harcourt and Kaduna are performing below installed capacity.
The national daily demand for kerosene is estimated to be between eight to 10 million litres, and supply is far short of demand because the low output of the nation’s refineries has forced the country to rely more on importation of the products in order to supplement consumption. When will the country be self-sufficient in the refining of these petroleum products? When are the people going to be buying kerosene at N50 per litre, as Otedola promised? The consumers are waiting.
Additional reports by Tomisin Oyelere, Folake Olagunju
and Funmilayo Pelewo