To think that Nigeria, Africa’s top crude oil producer, imports a big chunk of its refined petroleum products such as petrol and kerosene is bad enough. But worse still is that despite the fact that the country’s spending on ‘subsidised’ products including kerosene is among the highest in the world, it is essentially serving as a conduit for some highly connected people to swindle the country.
Not a few of the teeming Nigerians who are supposed to enjoy kerosene subsidy have come to the realisation, albeit with an unfortunate sense of helplessness, that the subsidy regime is a racket benefitting some government and their cronies at the expense of millions of Nigerians.
Kerosene, which is a particularly important fuel for many Nigerians used in cooking, lighting and heating, is said to represent more than 80 percent of the fuel mix from non-renewable resources used for cooking by Nigerians.
Nigerians spent N144.9 billion on kerosene per month in 2012/2013, compared to N91.8 billion spent on electricity including electricity vouchers, according to data from the National Bureau of Statistics. The expenditure on kerosene is a little higher than the N149.2 billion spent per month on house rent.
In the supposed subsidy scheme, the government requires marketers to sell kerosene at below market rates. It then pays the marketers the difference between the market price and the government-approved retail price.
But despite the subsidy regime, retail prices of kerosene (household kerosene) across the country have long been far above the government-approved price of N50 per litre, ranging from N100 to N250 per litre, depending on the location, with only the Nigerian National Petroleum Corporation (NNPC) petrol stations and a few retailers selling at the approved regulated price.
The country has spent at least N1 trillion over the past four years to subsidise kerosene, according to Aminu Tambuwal, speaker of the House of Representatives said. Juxtaposing that amount with the $9 billion Dangote Group will spend on its refining/petrochemical/fertiliser complex will help to better appreciate the magnitude of the rip-off that the kerosene subsidy has been over the years. The Dangote refinery will initially have a capacity of 400,000 barrels per day (bpd), doubling Nigeria’s refining capacity as well as cut imports of refined petroleum.
Shamefully enough, the country now imports more than 80 percent of its refined petroleum products for the servicing of the economy because of inadequate domestic refining capacity. Just last week, data from the Energy Information Administration (EIA), the statistics arm of US Department of Energy shows Nigeria as the biggest importer of kerosene from the US, with 292,000 barrels brought in February.
Nigeria’s four refineries of a combined capacity of about 445,000 bpd, which have been undergoing turnaround maintenance in perpetuity, to improve their reliability, operated at an average of 31.1 percent of capacity in 2012, according to recent data from the Central Bank of Nigeria.
We recall that in 2009, a directive from late President Umaru Yar’Adua ordered the NNPC to discontinue subsidy payments on kerosene since they were not reaching the intended beneficiaries. The NNPC then discontinued its claim for funds to pay for the subsidy until February 2012, when it claimed arrears for kerosene subsidies for the period between 2009 and 2011.
According to NNPC, the directive was stayed for execution as a result of its possible repercussions on the masses. But, pray, are Nigerians not already feeling and living with the repercussions despite the so-called subsidy?
We believe it is high time the monumental deception and massive haemorrhage of the nation’s purse under the guise of kerosene subsidy be stopped, and we therefore call on the federal government to summon the political will to put an end to the rip-off of most Nigerians by a few high and mighty.
