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Stats: 1,337 members, 591 posts. Date:October 18, 2019, 10:31 am

Petroleum Sector: The Argument Continues

By - - [ Economy ]

Millions Of Customers Have Argued that Price Per Litre of Kerosene Could be Lower

Since President Mohammed Buhari assumed the leadership of the Federal Republic of Nigeria, observers of developments in the Oil and Gas sector have severally acknowledged the concerted efforts to ensure a free flow of Petroleum Products at the downstream sector such as PMS (other wise known as Petrol), diesel, kerosene and cooking gas to the nooks and crannies of the country.

Before Mohammadu Buhari was sworn in as the president, the downstream sector experienced pipeline vandalization, large scale smuggling due to unfavorable economic products borders’ prices with the neighboring countries, Scarcity of petroleum products leading to long queues at the service stations, low capacity utilization and refining activities at the nation’s refineries,

At the inception of his presidency there were efforts to cripple operations due to militancy at the Niger Delta. This brought daily production down to 800,000 barrels per day for over 10 months but after a series of ceasefires were observed, daily production came up to 2.2 million barrels per day.

Despite increased in daily production, Nigeria still exports crude and imports petroleum products to meet demand for local consumption. At the point of importation, importers have been allowed to source foreign exchange from secondary sources hence the difficulty which plagued importation temporarily eased out.

With well over 30,000 storage capacity for Cooking Gas otherwise known as LPG in the Lagos depot alone since 2017, some observers are of the view that patronage of LPG has since increased. This implies those who hitherto cooked with kerosene or fire wood have now switched over to cooking gas of the 12.5 kg capacity which current sells for between N4, 200 and N4,500.

Observers of developments in the downstream sector have maintained that this change over should not be generalized because millions of Nigerians still cook with Kerosene and are consequently of the view that N225 price per liter could be lower for an everyday Nigerian to bear. Nigerians in this category cook for domestic and commercial purposes and the high cost of kerosene will have a multiplier effect on those who patronize those shops to buy food.

Some are of the view that a special case should be made for kerosene in recognition of its patronage by millions of buyers across the six geo political zones of the country.

A case in point is the presentation of a bill before the National Assembly to revisit the Palliative or a subsidy regime (though subsidy regime has been relegated to history by virtue of non provision for subsidy in the 2017 and 2018 National Budget) respectively.

The budget, which was passed by the National Assembly, was predicated on the production of 2.3 million barrels per day of crude oil, $51 per barrel oil price benchmark and an exchange rate of N305 to the dollar.

Workers in the public sectors especially at the states receive salaries at undefined periods hence the cash is not readily available for the purchase of kerosene.

The value chain of inconvenience goes beyond the buyers all through to members of the public directly or remotely. This may not have occurred if NNPC had a significant command of the distribution of products in the downstream sector. Presently, NNPC and her subsidiaries hold 14% of petroleum products distribution network .This implies 86% of the distribution processes and procedures still resides in the hands of private operators (marketers of petroleum products in the downstream).

In a related development and in the bid to increase production, NNPC has redefined what is now known as illegal refineries and came up with the concept of modular refineries which expectedly should increase local productions whenever they go operational.

For an improved perception and survival of NNPC, a greater attention should be paid to issues and developments at the downstream segment, because it is through this that stakeholders assess the performance of the corporation at the national and international market environments

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