KeroseneFollowing Federal Government’s decision to officially stop paying subsidy on House-hold kerosene in the 2016 budget, the product now sells for about N83 per litter instead of the previous regulated pump price of N50 per litre.

The latest pricing template for household kerosene released by the Petroleum Products Pricing Regulatory Agency (PPPRA) over the weekend indicates N83 per litter.
The new template showed that the retail or pump price of HHK was now N10.72 higher than the Expected Open Market Price of the commodity. The EOMP, according to the new template, is N72.28.

The EOMP is a summation of the landing cost of the commodity with the subtotal margins like bridging fund, transporters’ cost, dealers charge, admin charge, etc.

HHK, an energy commodity mostly consumed by low income earners in the country, has been subject of controversy during the subsidy regime as consumers hardly accessed the products at the official regulated pump price of N50. While only few major petroleum marketers and the NNPC retail outlets sold the product at the official price rate, most consumers usually buy at prices twice the official rate.

To access HHK at the subsidized price of N50, consumers had to spend long hours on queues and endure chaotic snail-speed process involved in being attended at the pump sites.

Allegations of widespread corruption has trailed the subsidy scheme with the HHK fingered as the most affected following gross abuse of the policy. Despite overwhelming evidence of fraud in the implementation of the scheme, the past government was unable to bring perpetrators to book or address the loopholes.

To most industry stakeholders and analysts, the decision to withdraw subsidy on HHK, though controversial, could be the ultimate solution to address the inherent challenges in the refining and supply of energy in the country.

“Yes it may hurt now because many are already used to buying it at N50 per liter but remember that without addressing the root causes of our poor refining situation, we will just be going down the cesspits of fraudulent subsidy scheme”, said Mr. Geoffrey Ukwani, a petroleum marketer.

By Olisemeka Obeche

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