19 March 2019

Nigeria, India - Consumers Dump Kerosene, Gas As High Prices Persist - Study

The relatively high prices of kerosene and cooking gas have compelled many households to take to increased utilisation of firewood in Nigeria.

Investigation by Vanguard showed that while the price of kerosene currently stands at between N200 and N300 per litre, depending on location, the price of cooking gas stands at N4,000 (N12.5 kg), which many households said they cannot afford.

A visit to some markets in Lagos and its environs showed that trading in firewood, charcoal and cow dung has become a very brisk business.

Many previously fertile lands were also observed to be bare in the outskirts, including Ikorodu and Ijebu Ode, thus exposing the environment to deforestation, erosion and other environmental challenges.

Study

In their recent study obtained by Vanguard, the Global Subsidies Initiative of IISD, with ENERGIA and partners, Spaces for Change, IRADe and Bangladesh Institute for Development Studies stated: "With a 40-50 per cent price increase in India and Nigeria, the majority said they would reduce subsidised fuel consumption and/or revert to biomass.

"Switching back to biomass has time and health implications for women, given they were found to be the primary cooks in all three countries surveyed. Women more frequently collect the wood or dung and are exposed to the smoke. Some households also reported secondary impacts such as a reduced ability of members to undertake activities that require lighting, such as studying and leisure time (e.g. in Bangladesh linked to kerosene)."

The study, involving surveys with 2,400 households as well as focus group discussions in Bangladesh, India and Nigeria and an initial scoping phase included a review of 28 episodes of fossil-fuel subsidy reform, and research of secondary data in Indonesia stated: "Millions of dollars worth of fossil fuel subsidies could be better targeted by governments to benefit poor women."

It stated: "Currently, governments globally spend the equivalent of USD400 billion on subsidies. That's around 10 times more than is needed to plug the universal education gap (USD 39 billion), around seven times more than the global energy access gap (USD 56 billion) and more than enough to finance SDG health targets (USD 134-371 billion)."

Subsidy

The study stated: "Overall, the research found fuel subsidies do not work well for poor women. A large share of subsidies accrues to wealthier segments of the population because those people have higher consumption levels and better access to energy. This effect is particularly strong for liquefied petroleum gas, LPG, as the researchers found in India, and also for a 'poor people's fuel' like kerosene, as observed in Bangladesh and Nigeria.

"Subsidies do not guarantee lower fuel prices--and may even create price premiums by increasing fuel scarcity. Even in countries with fixed fuel prices, households were found to pay significantly more. In Nigeria, low-income women reported paying between two to six times more than the official price for kerosene, and in Bangladesh, 14per cent more for kerosene.

"As a result, households in these countries were often not aware of the existence of a subsidy. These findings imply that any benefits from subsidies are even lower than previously estimated."

It stated: "The burden of queuing for scarce cooking or lighting fuels frequently falls on women. In Nigeria, women reported queuing for hours and sometimes all day to get kerosene. In Lagos, Nigeria, 57 per cent of survey respondents preferred informal dealers for convenience and availability, despite higher prices and safety risks of adulterated fuel."

Recommendation

The study which found other factors that could be significant for fuel switching and better access to cleaner fuels for women stated: "Better-educated women are more likely to choose LPG (as in Nigeria). Existing patterns of decision- making and purchasing power over energy choices within the household also need to be considered (educating men as well as women around energy choices).

"Other likely important factors include improving the distribution or electricity system, especially to rural areas and to the poor, in order to provide alternatives to switch to. In India, large drives to expand LPG distribution have played an important role in enabling greater access. Culture (tastes and preferences) may still matter more (e.g. in Nigeria)."

It added: "Finally, investing in subsidy alternatives could empower women more directly. In Nigeria, surveyed households did not prioritise energy subsidies over other kinds of support when asked what kind of government support households preferred - jobs, health, financial support and education to access to modern energy. While households might undervalue the benefits of modern energy, this nevertheless raises the question of whether the billions spent on an inefficient subsidy system might not be better spent on social protection programmes."

Nigeria

Buhari to Atiku - Produce Your Credentials

President Muhammadu Buhari has challenged Atiku Abubakar, the People's Democratic Party (PDP), candidate to produce and… Read more »

See What Everyone is Watching

Copyright © 2019 Vanguard. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.