N800m daily oil marketers’ kerosene swindle

That marketers of petroleum products and their agents in the country might have been short-changing Nigerian kerosene consumers to the tune of roughly N800m on daily basis, working with official statistics, as was reported by this newspaper most recently, did not really strike the public as a surprise. It, if anything, provided additional proof that the Nigerian society has lost its moral bearings, is now adrift, with heartless and unrepentant rent-seekers in the public domain in charge, and is fast decaying the more. We say so because of the countless subsidy, bribery and corruption scams trailing kerosene supply in recent years; without any visible official intervention to halt the stench, except the hubris often flashed as official defence. It is common knowledge that kerosene is highly priced by Nigeria’s poor, down-trodden and low income groups as a major source of energy, especially for cooking.
But never in recent history has its price nationwide been bearable for the aforementioned groups, in spite of the generous subsidy the privileged and monopoly importer of the product, the Nigerian National Petroleum Corporation (NNPC) is said to be paying to bring down the price for consumers. National Mirror in its latest report, for instance, gathered from the NNPC that national daily consumption of kerosene currently stood at eight million litres, while the official supply price to the market is N50 per litre. But consumers pay between N130 and N200 per litre, depending on their locations, to have access to kerosene. A market survey conducted by the newspaper in Lagos and its environs showed that major marketers, including Mobil Nigeria Plc, Conoil Nigeria Plc, MRS Nigeria Plc and Oando Nigeria Plc, did not have the product in their retail outlets presently. The Executive Secretary of Major Oil Marketers Association of Nigeria (MOMAN), Mr. Thomas Olawore, was quoted as saying that major marketers did not sell the product because they did not have allocation from the NNPC.
A national newspaper (not National Mirror) published a similar report in February 2014, alleging that oil marketers might have paid over N195.5bn in bribes to officials of the Ministry of Petroleum Resources and the NNPC before getting allocations to lift kerosene between 2010 and 2012. According to the report credited to credible oil industry sources, the NNPC compelled marketers to pay a bribe of N25 per litre as mobilisation fee to petroleum ministry and top NNPC officials before they could be permitted to lift kerosene. That was used to explain why it has been almost impossible to sell kerosene to end users at a price below N170 per litre. An analysis of figures obtained from the official website of the NNPC showing the Pipelines and Product Marketing Company’s (PPMC) kerosene sales by the newspaper revealed that 2.996bn litres were sold in 2010, 2.869bn in 2011, and 3.123bn in 2012, at which time NNPC imported the product at N156.46k per litre and sold to marketers at N40.90k per litre.
It was then reasoned that with a total of 8.988bn litres of kerosene sold in three years, about 7.819bn litres must have been lifted by oil marketers, who had to pay a N25 bribe for every litre of kerosene allocation they got between 2010 and 2012, based on the fact that marketers control about 87 per cent of retail outlets in the country, while the NNPC operates 37 mega stations, 12 floating mega stations and a little over 500 affiliate stations. If marketers lifted about 7.819bn litres of kerosene on paying N25 bribe on each per litre to lift at N40.90 per litre, the amount that must have been paid to corrupt petroleum ministry and NNPC officials would come to N195.5bn, the report said. But NNPC’s acting Group General Manager, Public Affairs, at the time, Dr. Omar Farouk Ibrahim, in response, dismissed the bribe claim as a blanket accusation against the national oil behemoth, demanding, instead, information on where it thrived in the corporation’s 22 depots in the country and the officials involved? Good enough, however, Ibrahim admitted that the NNPC sold kerosene at N40.90k per litre, but wondered why marketers were selling at between N120 and N130 per litre to Nigerians. It is, perhaps, pertinent to add that no marketer has been molested or prosecuted for transgressions against official kerosene pricing as yet, at least to public knowledge.
Indeed, what is the essence of NNPC subsidising kerosene when it has never sold at the subsidised prices of between N40 and N50 per litre. Recall also that former Central Bank of Nigeria (CBN) governor, now the Emir of Kano, Sanusi Lamido Sanusi, before he was shoved aside from office last year, alerted the nation that NNPC failed to pay $49.8bn – roughly N8trn or Nigeria’s two years’ budget, into the Federation Account. Sanusi later scaled down the amount amid intense pressure from higher authorities to at least $20bn. The former CBN boss said 80 per cent of the unremitted funds came in form of subsidy on kerosene. He also cited a presidential directive that barred kerosene subsidy for long, as well as debunked NNPC’s claims of paying the subsidy because NNPC consistently rendered returns to the Federation Account Allocation Committee (FAAC) indicating that it made no deductions for subsidy. But the Federal Ministry of Finance claimed that a government inter-agency committee realised that only $10.8bn was yet to be accounted for.
It is, however, unjust and objectionable that even with the free fall in the international price of crude oil; and FG’s reduction of the pump price of fuel from N97 to N87 per litre, the kerosene racket still thrives. When then will Nigerians experience appropriate pricing of kerosene?