January 26, 2016 - 8:08 PM EST
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That Hike in Kerosene Price

The official price of 'household kerosene' recently went up in

from N50 per litre to N83 per litre. The Petroleum Products Pricing Regulatory Agency (PPPRA) in its revised pricing template stated that the Nigeria National Petroleum Corporation [NNPC] will henceforth sell House Hold Kerosene (HHK) at N83per litre. Even when the official price was N50/litre, only NNPC retail outlets sold it at that price. Long queues for kerosene at the official price were the order of the day at NNPC stations where people, mostly those who will turn around and resell it at a higher price, spent days on end queuing for the product. They also had to bribe the petrol station attendants. Most other users regularly bought it for up to N150 per litre from neighbourhood retailers.

According to PPPRA, the new open market price (EOMP) of the commodity for NNPC retail outlets will be N69.9/litre. The landing cost is N55.6/litre; the ex-depot price is N73/litre while the retail price is now N83/litre. This hike in kerosene prices is not unconnected to the recent stoppage of subsidy payment to marketers. As from January 1, government had stopped paying subsidy to oil marketers for the importation of petrol and household kerosene 1 due to the fall in crude oil prices in the international market.

The rise in kerosene's official price is expected to lead to an increase in the open market price. This is causing ripples among the masses who think government is inflicting more pains on them. Meanwhile, independent marketers say that the price increase has nothing to do with them since they never got kerosene at official prices. They also say they will only supply to the public based on the price they get it. The Bureau of Statistics says an average Nigerian household spends about N500 daily on food but half of that amount is spent on kerosene.

Since most end users never got kerosene at official prices, they resorted to the forests. Charcoal and firewood have been the top sources of household energy in rural and poor urban households and could become even more so with this price hike. This is bad news for the forests and the environment generally.

forest cover has already dropped far below the 25 per cent level recommended by the Food and Agriculture Organisation, FAO.

Another unexpected effect of cheap kerosene was that some unscrupulous oil marketers tried to sell kerosene to aviators as aviation fuel. Chairman, Airline Operators of

(AON) Captain Nogie Meggison recently said, "Oil marketers are selling kerosene to us as aviation fuel. The NCAA is aware of this because we have sent a document to the NCAA on the issue." He said the International Air Transport Association had sent a Notice to Airmen (NOTAM) to all airline operators coming into
to beware of the aviation fuel being sold to them here. Higher kerosene prices could take care of this problem.

To government's credit, it had in the last few years introduced options such as the clean cook stove to discourage people from felling trees. Implementation hitches however stalled the program. As part of the clean cook stove program, rural dwellers were to get cooking gas in 3kg and 5kg cylinders. Refill outlets were to be established all over the country to enable users refill with ease. Experts say the LPG option remains one of

best considering that the gas being flared and causing environmental pollution can be converted into domestic use. There is huge health, environmental and economic benefits of switching from kerosene to gas for cooking but the populace here perceive gas as a rich man's fuel.

Government should follow up on the hike in kerosene prices with massive enlightenment campaigns to mobilise Nigerians in urban and rural areas to embrace the use of gas, which is cleaner and safer to use than either kerosene or firewood. Nor is gas all that costly to use, as many Nigerians seem to fear. Once one acquires a gas cooker, of which there are cheap locally fabricated types these days, gas itself is relatively cheap. Government should use this opportunity to push the country in that direction.

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Source: Equities.com News (January 26, 2016 - 8:08 PM EST)

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