Marketers make N148.5bn illegal profit on kerosene

Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke
| credits: File copy

Between January and September this year, oil marketers in the country made not less than N148.5bn illegal profit on Dual Purpose Kerosene sold to Nigerians.

Officially, the DPK is meant to be sold at N50 per litre, but this has not been the case as consumers have continued to buy the product at N100 and above per litre.

Daily supply of kerosene to the market is put at 11 million litres by the Petroleum Products Marketing Company, which implies that over N550m illegitimate profit is made by oil marketers daily on the product at a retail price of N100 per litre.

By implication, over N16.5bn abnormal profit is made every month, meaning that between January and September this year, a total of N148.5bn would have been dubiously made by marketers across the country.

This development informed the directive of the Department of Petroleum Resources last week that all marketers should revert to the regulated price of N50 per litre or be prepared to be sanctioned.

The Director, DPR, Mr. George Osahon, had said that, henceforth, marketers selling kerosene above N50 would be sanctioned.

He described the situation as disturbing and warned the marketers to desist from such an act, adding that DPR would from now on sanction any retail outlet caught selling kerosene above the approved price.

Sources in the downstream subsector of the petroleum industry, who spoke to our correspondent in separate interviews on Monday, however, said it was impracticable to sell kerosene at N50 per litre.

A marketer, who would not want to be quoted because of the sensitivity of the issue, told our correspondent on the telephone on Monday that the process had been compromised from the beginning.

He said from the Pipelines and Products Marketing Company’s template, the cost price of kerosene per litre is N40.90, with a five per cent refundable deposit, which had never been refunded, putting the figure at N42.95.

The source added, “A marketer will also need to hire a vessel to convey the product to the depot and this cost about N3 per litre. Aside this, another N3 will have to be paid as depot charge by the marketer. All these will amount to about N48.95 and the product hasn’t left the marketer’s tank.

“You still have to transport the product from the tank to petrol stations for about N1 per litre. Already, the marketer has incurred a cost of N49.95 before the product gets to the consumer.”

Another marketer told our correspondent that officially, N4.60 was the approved margin on kerosene per litre, noting that the addition of the margin to the cost incurred by marketers would take the price above N50 per litre.

The marketer also said that oftentimes, the product was never bought atN42.95 by his colleagues.

According to him, marketers are meant to pay some additional costs in form of bribe to get the product, which automatically shoots up the price.

The Managing Director, PPMC, Mr. Haruna Momoh, had blamed the price anomaly in the kerosene market to sharp practices of some middlemen in the industry.

He said, “It is the wish of the government to make kerosene available, but our research from when we came in is a totally different picture to compare with the good intention of the government. The product is diverted to neighbouring countries and also used for production and construction.”

Momoh said though his organisation was a bulk supplier of kerosene, “the job of ensuring that it reaches Nigerians at the official price of N50 is outside my purview.”

Expressing surprise that the product was often not available to Nigerians, Momoh said 11 million litres of kerosene were being supplied on daily basis at the cost of N40.90, stressing that the supply was coming from two major sources, importation and local production by Nigerian National Petroleum Corporation.