NNPC, DPR And The Rot In The Kerosene Subsidy Regime How many of you have gone to a filling station to buy DPK otherwise known as Kerosene, lately? When I was home for Christmas some weeks ago I ran some errands for my mother, who still insists on cooking the family meals with kerosene. And when I arrived at the gas station and held out my 15litre gallon to the attendant, she calmly told me, Oga na N140 oh. Like a typical Nigerian, I paid and left with the product without asking further questions, as people were already queuing behind me to buy. I know my little experience may not be very different from what Nigerians face daily buying DPK from the dealers. In a recent poll conducted by BusinessDay in collaboration with NOI polls, it was discovered that 97% of Nigerians pay more than the official price of N50 for kerosene. In the North-East, North-West and South-East it was reported that kerosene sold for N141 per litre. In the south-south it sold for about N131 on the average, and N129 in the southwest. But why the great difference? Why do Nigerians pay as much as a 300% of the so called official price? If as we hear that the Federal Government is subsidizing the price of kerosene, who then is responsible for the product selling way and above the subsidized price? And why are the relevant authorities not doing anything about it? While testifying before the senate in February last year, the petroleum minister made an interesting revelation. She said, the subsidy was kept at N50 per litre for the benefit of the Nigerian masses, even though the landing cost is N150 per litre. What this means is that the F.G procures DPK for N150 by whatever means, pays off N100 - N110 from the national purse (as subsidy) and then sells to the depots or the marketers for N40-N50. Assuming the marketer buys from NNPC at N40, he deducts his expense, sells at N50 in his filling station and takes the balance as profit. But sadly that is not the case. While interacting with a member of the Independent Petroleum Marketers Association Of Nigeria (IPMAN) member yesterday, he revealed that ideally they should buy DPK directly from the NNPC. But because NNPC does not have enough depots, they store these products with private depot owners for a fee and subsequently the petroleum marketers buy from the private depots. This middle-man factor he said contributed to the increase in the price. He said the last time he bought from the depot, he paid N92 instead of the official N40. If we buy at N92, how then will people expect us to sell for N50 at a loss, he asked. Even the NNPC itself admits that the middle-man is a major factor responsible for the increase. Last week, its Group Managing Director, Commercial, Mr Ohi Alegbe while launching the Kero Correct stated that the scheme was aimed at cutting off the several layers of middlemen who made it difficult for the end-user to enjoy subsidy on the product. And so I ask, what is the function of the DPR, an arm of the NNPC responsible for regulating prices? Why does the DPR allow these so called private depots to buy from NNPC at below N40 and end up selling to IPMAN members at N90-N92? Why has NNPC under the supervision of the Petroleum Minister, Diezani Allison-Madueke allowed this brazen corruption to go on for so long, whereby the nation pays billions as subsidy only for some corrupt Nigerians to benefit from the largesse, leaving the poor taxpayer to bear the brunt? Just last year the senate committee on finance in a report investigating the CBNs allegation of unremitted funds by the NNPC, revealed that the total kerosene (DPK) subsidy paid out by the Federal Government was N685.909billion ($4.443billion) in 2012 and 2013 which was not appropriated for in the budget. What it means is that the F.G spent that whooping sum to pay some greedy fat cats who gained from both sides i.e from the F.G and from the masses whom they punished with further increases. In saner climes, the petroleum minister should have lost her job for such gross incompetence, and the finance minister issued a querry for making such unsubstantiated payments. In the 2015 budget which has been presented before the National assembly, the F.G was reported to have allocated N91billion ($478million) as subsidy for DPK. What subsidy if I may ask? If people keep on buying kerosene way above the official price, then of what use is the subsidy? The government might as well fully deregulate and let IPMAN buy straight from the importers and fix their prices. This is the time for Nigerians to arise and ask questions. Why has the Petroleum Industry Bill (PIB), an executive bill now gathering dust in the national assembly for years now not been passed? As far as im concerned many of the present federal lawmakers should be voted out because they have failed. Till the PIB is passed and the NNPC unbundled as a result, it will continue to affect things negatively in the petroleum sector, which for now is our major source of foreign exchange. NITEL was jettisoned and we now have every Nigerian owning and using a telephone. NEPA (PHCN) was unbundled and things are looking up in the power sector. It is time for NNPC to tow the same path. (Nonso Ndibe writes from Abuja)
Posted on: Tue, 27 Jan 2015 11:38:23 +0000
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