The Federal Government has hiked the price of Household Kerosene (HHK) to N83 per litre from N50 per litre, thereby, officially ending subsidy on the product.
The new price according to the Petroleum Products Pricing Regulatory Agency, PPPRA , in its product pricing template released at the weekend, however, applies only to the Nigerian National Petroleum Corporation (NNPC), meaning that other petrol stations and dealers can sell higher than the stipulated amount.
The hike in the price of kerosene was in disparity with the fallen price of crude globally.
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.
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.
In his words: “Since 2007, while crude oil price had been moving up and down, the template remained the same. This had made it necessary for us to introduce a mechanism whereby the template would be sensitive to the price of crude oil.
“However, the template is not static, as there would be a quarterly review and if there is any major shift, the Minister of State for Petroleum Resources would be expected to call for a review, either upward or downward, depending on the market condition.“
