NNPC Headquarters Abuja
Household kerosene has been scarce since the beginning of this year and where the product is available; it is priced out of reach of low income households. Indication that the situation may even worsen this forthcoming yuletide emerged at the weekend as a litre of the product is now sold at N160 at the filling stations. This has called to question as to what has become of the recently launched NNPC-Capital Oil Kero-Direct Scheme (KDS), writes Chika Amanze-Nwachuku
The Kero-Direct Scheme was initiated by the Nigerian National Petroleum Corporation (NNPC) in conjunction with Capital Oil and Gas, a leading indigenous player in the downstream petroleum industry. The scheme was designed to supply kerosene directly to Nigerian households through the use of ultra modern mobile fuel dispensing trucks owned by Capital Oil and Gas.
It had been envisaged that the KDS would provide lasting solution to the lingering kerosene scarcity as well as the challenge in its distribution to homes in Nigeria.
At the flag-off of the pilot scheme on July 16, Group General Manager, Group Public Affairs Division at the NNPC, Dr Levi Ajuonuma, had stated that the exercise, which commenced in the Lagos area, would be extended to other states of the federation.
According to him, the initiative was borne out of the NNPC’s determination to ensure that kerosene gets to end users at the right time and at the correct price of N50 per litre.
Recurrent Kerosene Scarcity
Although Nigeria is Africa’s biggest oil producer, much of the country’s refined products were imported because of the poor state of the refineries. This development often results in supply and distribution gaps. But oil marketers and the NNPC often differ on reasons for recurrent kerosene crisis in the country.
Testifying before the House of Representatives plenary hearing on the kerosene scarcity recently, Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, blamed illegal diversions and smuggling for the months-long scarcity of kerosene being experienced across the country.
“Obviously, if our kerosene is going outside and our retailers are taking them there, then those countries are getting them at a cost cheaper than the actual cost.” The minister said although the daily kerosene need of the country is estimated at eight million litres, 11 million litres is provided to the market. Much of that are “hoarded, diverted and illegally moved” into other countries, sustaining a shortage that has remained for months, the minister said.
But marketers insist that the monopoly by NNPC and its subsidiary the Petroleum Product Marketing Company (PPMC) in the import was the reason for persistence scarcity of the product.
Group Chief Executive Officer of Oando Group, who also is the Chairman of Major Oil Marketers Association of Nigeria (MOMAN), Mr. Wale Tinubu, told THISDAY recently that Federal Government’s decision to withdraw payment of subsidy on kerosene from the Petroleum Support Fund (PSF and the subsidisation of the product by the NNPC forced major oil marketers to stop importation of the product.
He explained that when the subsidy was initially removed from kerosene and the product deregulated, major marketers had continued to import, until the NNPC started to subsidise the product since the last nine months.
At a meeting with members of MOMAN in the wake of the biting kerosene scarcity in June, the NNPC’s Group Managing Director (GMD), Mr. Austen Oniwon, had identified distribution and supply networks problem as reasons behind the scarcity, and announced that the corporation would embark on a comprehensive meeting with other stakeholders in the industry to ensure uninterrupted distribution of the product.
The Executive Secretary of MOMAN, Mr. Femi Olawore, who spoke on behalf of the association, had pledged the commitment of members to work towards the achievement of the 10 days undertaken.
“We have been given the assurance that we will get the product in large quantity. We give ourselves 10 days, with the product coming in, we would like to assure you that we will start immediately and we shall all see the effect of pumping the product into our retail network and to the consumer. We want to say that we have done it before and we are ready to do it again,” Olawore stated.
But despite these promises, filling stations owned by members of MOMAN still sold kerosene at exorbitant rates.
KDS Brought Succour to Users
Both the NNPC and the Capital Oil and Gas had noted that the KDS was designed to provide lasting solution to the perennial kerosene scarcity and the challenge in its distribution.
Ajuonuma said, under the arrangement, kerosene would be supplied to households in the country directly through the use of ultra modern mobile fuel dispensing trucks owned by Capital Oil and Gas.
He explained that the choice of Lagos for the commencement of the project would provide an invaluable knowledge base for the corporation in good time to perfect any noticeable shortcomings in the programme before the eventual full blown deployment of the dispensing trucks to other states.
“Our determination to arrest this artificial challenge in the distribution of kerosene to Nigerians is total. What we are doing here today is to guarantee that the product gets to the end user at the right time and correct price of N50 per litre,” Ajuonuma said at the well-attended function.
He disclosed that the deployment of the mobile dispensing trucks was not going to be an adhoc exercise “but a well thought out product distribution strategy by the NNPC Retail and Capital Oil, designed to complement the conventional method of selling kerosene at regular filling stations”.
Prior to the commencement of the KDS, low income housewives, who relied on Kerosene for their cooking had resorted to charcoal and firewoods, as filling stations sold a litre of kerosene at between N120 and N150 a litre and at the black market for as much as N200 and N250 a litre depending on areas of purchase.
Investigations by THISDAY revealed that at the black market, a gallon of four litres of kerosene was then sold at about N850.
The KDS was first launched in Lagos and was within weeks of its take-off extended to Imo, Anambra, Kaduna and the Federal Capital Territory (FCT), Abuja.
The scheme brought a lot of succour to kerosene users in these states as it not only crashed the price of the product from an all time high of about N250 a litre to the recommended N50 a litre, but addressed the challenges associated with its distribution as the product was brought to neighborhoods and dispensed to users directly through the Capital Oil ultra modern dispensing trucks on weekly bases.
To ensure that profiteers did not exploit the situation, nobody was allowed to buy more than 25 litres at once.
The project was designed in such a way that no fewer than 880 families benefitted from the scheme. Amuwo -Odofin and Apapa Local Government Areas were the starting points.
Those who dispensed the kerosene ensured that middlemen did not hijack the scheme, as the sale was restricted to 25 litres to each household as planned. The choice of Amuwo-Odofin and Apapa as selling points for the commencement of the project was deliberate as according to the facilitators, those areas are among places with higher concentration of people.
Capital Oil MD, Ifeanyi Ubah, had explained that his company had been very concerned about the difficulty in getting kerosene for domestic use. He said: “It is in response to this that the company came up with this innovation of deploying mobile filling stations with standard dispensing pumps to deliver kerosene at official price of N50 per litre to Nigerians”.
He noted that the scheme would afford users greater access to the product with a view to reducing the use of charcoal and fire woods, which are hazardous to health.
Aside from Amuwo Odofin and Apapa, five other local councils in Lagos also benefitted from the scheme. The five councils that were supplied the product were Ikosi/Isheri, Kosofe , Surulere, Amuwo Odofin and Apapa Local Government (LGAs).
Officials of the Department of Petroleum Resources (DPR), oil and gas industry regulator and Chairmen of the benefiting councils supervised the exercise to ensure that it was conducted in orderly manner and nobody bought more than the stipulated 25 litres at a time. Policemen from the Area Commands were also stationed at the various selling points to ensure there was no breakdown of law and order.
Some of the beneficiaries spoken to, lauded the initiative, saying it was the surest way of getting the product to the reach of end-users with ease. They urged the NNPC and Capital Oil to ensure that the project was sustained in order to address the protracted kerosene scarcity in the country.
Chairman of Kosofe Local Government, Mr. Ademuyiwa Adedeji, commended the scheme, pointing out that if sustained, it would crash the high cost of the product. “I am happy and highly delighted to see this is a reality. I am personally here to ensure that everybody is served and to make sure that they don’t exceed the 25 litres per household. I am sure it is sustainable and if carried out further, will not only crash the price, but will put an end to black market”, Adedeji told journalists at the scene.
His Surulere counterpart, Mr. Rasaq Orasegun, said the initiative was a welcome development, which would no doubt bring an end to the months of kerosene scarcity in the country. Governors of other states where the scheme was launched as well as kerosene users in those states described the project as timely and urged that it be sustained.
In Owerri, no fewer than 27 local governments were said to have benefitted from the project.
However, observers had expressed concerns as to whether or not the project would be sustained given that a similar one launched by African Petroleum in conjunction with Access Bank plc, tagged ‘Kerosene For All’, which enjoyed wider publicity in the media could not last.
Citing that experience, users who described the KDS as a well-thought-out project had repeatedly called on NNPC to ensure availability of adequate product for the project.
To ensure that the exercise is sustained, Capital Oil was said to have acquired seven large barges and five tug boats to ease product movement.
The company has world class depot, with 30 arms loading gantry, which has the capacity to store about 196 million litres of products.
It also has dispensing capability of 56 million litres per day as well as deepwater jetty that is capable of docking four large vessels simultaneously, 700 road tanker fleet, integrated products pipelines, regional strategic oil depots in Suleja, Funtua, Kano and Emene as well as 1,100 capacity-ultra modern truck park in Lagos.
With these facilities in place, the company said it was ready to sustain the KDS, if adequate product was made available by the NNPC.
Investigations by THISDAY last week revealed that the price of kerosene has again risen to about N160 per litre as only few filling stations had the product.
However, the NNPC has continued to blame the skyrocketing price on some unscrupulous marketers, who it said deliberately hike the price of kerosene, after buying at subsidised price from its depots.
Investigation by THISDAY showed that the NNPC sells at ex-depot price of N40.90 to marketers but these greedy marketers sold at N135 per litre to other marketers that did not have direct allocation from the NNPC.
Ajuonuma who condemned the attitude of these marketers said: “We (NNPC) have been crying that we are not making money; it is the marketers that are making the money. They are getting kerosene almost free from NNPC. Why should they hike the price? Look at the amount they are making. That is why the government should remove subsidy and deregulate the sector”.
He noted that subsidy had enriched few marketers at the expense of Nigerian masses and the Federal Government, even as he urged the DPR to check the excesses of marketers, who are involved in profiteering and other sharp practices.
THISDAY learnt that while the marketers who had direct allocation from the NNPC currently sold at N150 per litre at their filling stations, others who did not have direct allocation sold at N160 per litre.
Some major marketer have reportedly abandoned kerosene business and concentrated on Automotive Gas Oil (AGO) and Premium Motor Spirit (PMS) due to the price hike. Filling stations in Lagos that belong to Mobil, Total and AP sources said no longer sell kerosene.
A marketer told THISDAY that he abandoned kerosene business because the product was highly subsidised and only the NNPC imported it at the moment.
Even at N160 per litre, most filling stations in Lagos did not have kerosene at the weekend, according to THISDAY checks. In Ejigbo, only the NNPC ‘s depots was selling kerosene at the weekend, forcing residents to revert to the use of fire wood.