Why Kerosene is sold Beyond Official Price-NNPC

The Management of the Nigerian National Petroleum Corporation, NNPC, has
said that diversion of kerosene to neighbouring countries, industrial use,
aviation fuel, sharp practices by middlemen and pipeline vandalism are
reasons why kerosene is not readily available for domestic consumption.
Group Managing Director of the Corporation Engr. Andrew Yakubu made this
disclosure Tuesday during the two-day investigative public hearing on
supply, distribution, expenditure and subsidy on kerosene.

Engr. Yakubu maintained that due to a number of issues ranging from
incessant pipeline vandalism and diversion of the product to road
construction, the product which is meant for the masses is not readily
available.
“There are quite a number of competing demands for kerosene and until
these are addressed by other relevant agencies, the issue of kerosene not
being readily available for domestic use will continue to reoccur every
now and then. The way out is for this committee to collaborate with the
NNPC to encourage the sale of liquefied petroleum gas otherwise known as
cooking gas,” Engr. Yakubu quipped.
He informed that already the NNPC has stepped up the supply of LPG from
65,000 metric tonnes in 2011 to 250,000 metric tonnes in 2013 stressing
that the target is to grow the consumption of the product to 500,000
metric tonnes by the end of 2014.
The NNPC helmsman stated that the increase in the consumption of cooking
gas will go a long way to reduce the dependence on kerosene which will in
turn help in the redistribution of kerosene to those who may still want to
consume it.
Responding to a question on whether kerosene subsidy is still in place,
the NNPC GMD said that was exactly what he met when he assumed office in
June 2012 adding that kerosene subsidy is funded by unrealizable revenue
flow. “The NNPC takes crude at international price and sells it at the
domestic market at regulated price of N50 per liter,” he stated.
Answering a question on what the NNPC is doing to stop kerosene
diversion, the NNPC helmsman said that the Corporation does not have the
power to police marketers and sanction them adding that there are
statutory bodies with the responsibility.
Commenting on the legality of kerosene subsidy, the NNPC Company
Secretary, Anthony Madichie citing Petroleum Act section 6 subsection 1
said only the Minister of Petroleum Resources has the authority to fix
petroleum product prices stressing that if a presidential directive is
given and not gazetted, such directive will not be effective.
In his submission to the committee, the Managing Director of the Pipelines
and Products Marketing Company, PPMC, a subsidiary of the NNPC, Prince
Haruna Momoh informed that kerosene is sourced for the Nigerian market
through importation and domestic refining adding that Dual Purpose
Kerosene is sold to coastal marketers, Major Marketers Association of
Nigeria, MOMAN, Depot and Petroleum Products Marketers Association, DAPPMA
and NNPC Retail.
“I can confirm to this committee the statistics for the supply of DPK is
as follows. In 2010, NNPC supplied 2,515,582.44 metric tonnes of DPK, in
2011, NNPC 1,922,263.56 metric tonnes, in 2012, NNPC supplied 2,622,843.20
metric tonnes and in 2013, NNPC supplied 2,671,747.97 metric tonnes making
a total of 9,732,437.17 metric tonnes,” Prince Momoh revealed.
In his keynote address, the Speaker of the House of Representatives, Hon.
Aminu Tambuwal represented by the Deputy Speaker, Hon. Emeka Ihedioha said
the investigative hearing is aimed at finding a lasting solution to
kerosene scarcity in the country.
Presiding over the investigative hearing, the Chairman of the House of
Representatives Committee on Downstream, Hon. Dakuku Peterside said the
hearing was not to witch hunt any agency but to work out modalities to
ensure that kerosene is bought at the official pump price by the masses