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