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Kerosene Price Raises To 83 As FG Ends Subsidy

kero qThe Federal Government has officially withdrawn the subsidy on Household Kerosene (HHK) as its price raised from N50 per litre to N83. The Petroleum Products Pricing Regulatory Agency, PPPRA , in its product pricing template released, weekend, however, stated that the N83 per litre price applies only to the Nigerian National Petroleum Corporation (NNPC), meaning that other petrol stations and dealers can sell higher than the stipulated amount.
Curiously, the hike in the price of kerosene came at a time when the price of crude oil had dropped to record low, with the price of petroleum products, such as kerosene, fuel and diesel, among others, dropping significantly in a number of countries, like the United States.
This also brings to question, the recent reduction in the price of Premium Motor Spirit announced by the Federal Government and which commenced at the beginning of the year.
Again, the PPPRA’s template also showed that at N83 per litre, the Federal Government is making a gain of N10.72 for every litre, as it puts the Expected Open Market Price, which is the Landing Cost plus Total Margins at N72.28 per litre. The expected open market price is the prevailing open market rate for the product in Nigeria, after taking certain costs into consideration.
Giving a breakdown of the price, the PPPRA template put the Landing Cost of the product at N57.98 per litre, while the total margin due for middlemen was put at N14.30.
Further breakdown of the Total Margins showed that retailers’ margin was put at N5 per litre; Transporters, N3.05 per litre; Dealers, N1.95 per litre; Bridging fund, N5.85 per litre; Marine Transport Average, N0.15 and Admin Charges, N0.15.
The PPPRA further put official ex-depot price, which is the price depot owners would sell at marketers, at N68.70 per litre, official ex-depot price for collection, N73 per litre while ex-coastal price is N68.02 per litre.
Late December, the PPPRA had on behalf of the Federal Government announced that effective January 1, 2016, Premium Motor Spirit, otherwise known as petrol, would be sold at N86 per litre by the Nigerian National Petroleum Corporation (NNPC) retail stations, while other oil marketers would sell at N86.50 per litre.
Executive Secretary of the PPPRA, Mr. Farouk Ahmed, who made the announcement, said the reduction in the price of the commodity was due to an implementation of the revised components of the Petroleum Products Pricing Template for PMS and household kerosene.
According to him, the revised template, which would be reviewed on quarterly basis, is geared towards ensuring an efficient and market-driven price that would reflect current realities.

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