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PPPRA gives reason for high cost of kerosene

By on December 24, 2013

The Executive Secretary, Petroleum Products Pricing Regulatory Agency, Mr. Reginald Stanley, has attributed the high cost of kerosene at the retail end to many factors.

He said long chain of handling, smuggling (because of the huge arbitrage in price), use of kerosene in diesel blending and fuelling aircraft, as well as blending cut-backs to produce emulsion used in road construction, were some of the factors responsible for the high cost of the product.

Explaining the complexity of the kerosene value chain, Stanley said in a statement on Sunday, “Kerosene, unfortunately, has one of the longest chains in handling and at any point it changes hand, it is at a premium; hence, the very high cost at the retail end.”

According to him, there are two grades of kerosene currently in the market: Aviation Turbine Kerosene and Household Kerosene.

“ATK is used in fuelling aircraft, while HHK is used in domestic cooking and lighting homes,” he explained.

The PPPRA said it was the current global trend for refineries to produce mainly ATK for the aviation market, but added that Nigeria, Venezuela, India and Libya were among the few countries, whose refineries were still producing HHK.”

Stanley noted that due to the inability of the Nigerian refineries to produce enough kerosene to meet increasing demand, it had become necessary to import the ATK grades commonly referred to as Dual Purpose Kerosene.

“This grade meets also the HHK, which actually is a lower grade of kerosene,” he added.

He described DPK as superior diesel as it blends perfectly with diesel.

“Just blending one litre of kerosene gives the marketer N100/litre extra profit. Consequently, the temptation to blend DPK with AGO (diesel) is very high,” he added.

 

 

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