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Kerosene subsidy removal: Consumers seek cheaper gas alternative

By BusinessNews Staff on January 25, 2014

Consumers have asked the Federal Government to spend the saving on the removal of subsidy on kerosene on making the acquisition of cooking gas kits affordable.

The PUNCH had on November 28, 2013 exclusively reported that no provision was made for kerosene subsidy in the 2014 budget.

The report had stated that the Federal Government would stop kerosene subsidy this year after spending N634bn to subsidise the retail price of the product between 2010 and 2012.

According to the report, N110bn was spent on kerosene subsidy in 2010, N324bn in 2011 and N200bn in 2012, and these came up to N634bn in the three-year period.

Despite the huge spending on kerosene subsidy, the Chairman, House of Representatives Committee on Petroleum (Downstream), Mr. Dakuku Peterside, recently bemoaned the situation whereby the masses could not buy the product at the regulated price of N40.90k per litre.

Only those who can bear the long queues at the Nigerian National Petroleum Corporation’s outlets and a few other outlets are able to buy the product at the government approved price despite the huge subsidy expenditure over the years.

Without any hope of getting the product at N50 per litre, consumers are envisaging a hard time and lament the lack of financial wherewithal to switch to Liquefied Petroleum Gas as an alternative.

Eighty per cent of Nigerian households depend on kerosene as their cooking fuel, with an average consumption rate of eight million litres per day.

Analysts, who argued that the N634bn spent on kerosene subsidy had little impact on the masses but enriched only a few people, welcome the removal as the right step in driving a nationwide shift from kerosene to LPG.

However, it was equally argued in some quarters that majority of the households lacked the financial capacity to switch to LPG.

“Kerosene is expensive for the common man and we heard that the price may still go up; but we cannot afford cooking gas because of the high cost of cylinders and cookers,” Mrs. Sikirat Okanlawon, a petty trader who lives in Oshodi area of Lagos, said.

Mrs. Folashade Anibaba, a call card vendor in Ikeja, remarked that most households using kerosene as cooking fuel were poor, adding that the cost of migrating to gas was prohibitive.

Mrs. Esther Obi, a housewife based in the Ojo area of Lagos, said the removal of kerosene subsidy by the Federal Government was in order considering the fact that most consumers seldom get the product at the subsidised rate.

She, however, decried the financial inability of many households to adopt a better alternative energy such as the LPG.

To prevent more Nigerians opting for environmentally unfriendly alternative sources of energy such as firewood, charcoal and sawdust, Obi said the government should spend the savings from kerosene subsidy on providing cheaper access to cooking gas.

The President, Nigerian Liquefied Petroleum Gas Association, Mr. Dayo Adeshina, who lauded the plan to remove the subsidy, said, “Government needs to take a conscious decision to drive a mass shift from kerosene to LPG as it was done in Indonesia. The Indonesian government took a conscious decision to stop kerosene subsidy, which was gulping $9bn a year. They found that they would only need to invest $2bn in cylinders and cooking stoves and save $7bn.

“We need a roadmap to solve all the various challenges, which plaque the sector such as tariffs and duties on equipment and cylinder manufacturers.”

The Executive Secretary, Major Oil Marketers Association of Nigeria, Mr. Obafemi Olawore, urged the government to deregulate kerosene, focus on LPG, resuscitate local production of cylinders and subsidise them for Nigerians.

He said, “I have always said that kerosene subsidy should be removed, but I am gradually getting convinced that instead of subsidising consumption, it probably will be better to subsidise production.”

[Punch]

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