7 January 2014

Nigeria: How Far Does Kerosene Subsidy Gets to the Masses?


One issue on the front burner of Nigeria's economy is kerosene; its subsidy and availability. The issue is so real that it calls for an intricate question: Is kerosene the best thing for Nigeria at this time? Do we really need subsidy for kerosene?

The Federal Government subsidizes kerosene at N110/litre to make it available to the masses at N50/litre but it is common knowledge that the market price of a litre of kerosene ranges between N115 - N150 defeating the entire aim of the subsidy.

A lot of factors affect the cost of kerosene, these factors range from handling charges, arbitrage by peddlers, diversion for use as aviation fuel, production of emulsion, used for road construction, smuggling to other countries, mixing with AGO, etc. Bottom line is that the masses do not feel the impact of the subsidy and hence, do not benefit from the Federal Government kerosene subsidy.

Taking a diversion from the 'subsidy' issue, the next question arises. Is kerosene the best thing for Nigeria at this stage and level of our development!

Kerosene which was advocated as a cleaner alternative to firewood and other solid fuels has now been seen to be equally unhealthy. Studies have shown that the emissions associated with the use of kerosene both in and outdoor are enormous and dangerous, from diseases such as asthma, lung infection, tuberculosis, cancer, just to mention a few, including accidental explosions and poisoning.

Alternatively, Nigeria should be thinking more along the lines of Liquefied Petroleum Gas (LPG) joining the rest of the developed world. Nigeria ranks as the 7th highest producer of LPG globally, yet our national consumption is minimal.

With a national 3,258,900 MT production of LPG in 2012 and 840,400MT reserved for domestic consumption, statistics have shown that the national domestic consumption in 2013 stood at a minimal 250,000MT leaving 590,400MT untouched. Only five per cent of households in Nigeria use LP Gas, four per cent use electricity, the remaining 91per cent use other biomass/Solid fuels and Kerosene.

LPG has been seen to be a very clean and efficient fuel. It is a non-toxic gas and is healthy for use indoors and outdoors. It does not cause pollution and therefore promotes good health. Aside from its health benefits, it also has numerous environmental and economic benefits.

The LPG industry is one that needs to be tapped into. With the growth of LPG consumption, a lot of industries will spring up, from the manufacturing of cylinders, burners, accessories just to mention a few to the springing up of numerous GAS plants across the Nation which will in turn provide thousands of Job opportunities.

The topline is Nigeria is blessed with this energy that is grossly underutilized. It is time that the masses looked away from kerosene and its woes and looked towards the potentials of LPG.

Mrs Ugona, LPG Manager at PPMC headquarters, writes from Abuja

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