- With adequate planning and more seriousness, there should be no shortage of kerosene and gas
An acute shortage of Dual Purpose Kerosene (DPK) and Liquefied Petroleum Gas (LPG), otherwise known as cooking gas, that hit the country about a month ago, has further compounded Nigerians’ hardship. This has invariably led to the prices of both products skyrocketing. For instance, the four-litre gallon of kerosene, which sold for N1,200 about three weeks ago, now sells for N1,600; while a 12.5kg cylinder of gas is now sold for between N4,000 and N5,000, from the previous N3,200.
We do not understand why the Federal Government allowed this to occur in the first place; to allow it linger is beyond comprehension. Kerosene is the common man’s energy, in which case it should be affordable and available. As for cooking gas, its scarcity should be an abomination in a country trying to discourage the use of dirty fuel and protecting the environment.
The incessant scarcity of these products is an indication that the government is yet to overcome the challenges bedevilling their supply. Kerosene is scarce because our refineries are not producing at optimal level. Even the importation that the government resorted to has not guaranteed steady supply. Before the present scarcity, both the Nigerian National Petroleum Corporation (NNPC) and major oil marketers had been importing kerosene.
However, for some time, the marketers have not been able to get forex and therefore have to patronise the black market with its outrageous exchange rates. Only a few weeks ago, the marketers complained that the Federal Government was owing them about $1billion, mainly bank loans.
Of course the inability of the marketers to import as they used to will naturally tell on supply. All we need to prove the supply shortfall is the statistics from NNPC’s monthly financial and operations report for last November, which revealed that in September 2016 (the last time it imported the product) it brought in 33,662,899.42 litres while total production from the three refineries was a paltry 42,313,316 litres as against 84,153,826 litres in October. In line with the natural law of demand and supply, prices will jump in a situation where demand exceeds supply.
The problem with gas appears hydra-headed. One is inadequate infrastructure. Mr. Basil Ogbuanu, President of the Nigerian Association of LPG Marketers (NALPGAM), gave a distressing example. He said for about a week, a vessel laden with aviation fuel occupied the jetty waiting to discharge even as other petroleum products cargoes queued up, unsure of when they would be allowed to discharge their products. Meanwhile, there was also an LPG vessel (a product that is sorely needed) that had been at the anchor point for weeks, incurring demurrage.
It is becoming obvious that we need more than the two terminals that can take LPG in Lagos. The government should build terminals in Port Harcourt and Calabar, for instance.
Just as with kerosene, forex remains a serious challenge in the gas supply chain. This is because the product is priced locally at international rates. The problem is exacerbated by the weak exchange rate of the naira that has further increased the price of LPG. We also have to factor in the cost of diesel to power the generators when the gas gets to the plants. A litre of diesel now sells for N250. “All these costs eventually lead to increase in retail price of gas. Even if the vessels are allowed to discharge now, the cost of 12.5kg from a reasonable wholesale plant cannot be less than N4,000.’’ Ogbuanu lamented.
The government must address these challenges as well as the security concerns that led to the abandonment of the NOJ and POP terminals. It should also be ready to “invest in transportation of LPG from those terminals into the country either by rail or by trucks. We have to get all of that done. We have to make sure that we have enough distribution centres across the country,’’ as suggested by the NLNG.
And, as the National Chairman, Liquefied Petroleum Gas Retailers (LPGAR) branch of NUPENG, Mr. Chika Michael Umudu said, the government may have to revitalise the 2007 Obasanjo LP Gas policy that helped to generate some improvements in the sector.
