Government Finally Gives Up On Kerosene Subsidy, Kerosene Will Now Sell For N83

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The Petroleum Product Pricing Regulatory Agency has removed subsidy on Kerosene. This PPPRA in its website released a new template that puts the retail price of Kerosene at N83 per litre. The template was also only meant for the NNPC suggesting that they expect independent marketers to sell at their own established open market price.

Here is the component of the pricing template

 
N
Landing cost 57.98
Sub-total margins 14.3
Margin 10.72
Price 83

Interestingly, the Government retained an exchange rate of N197 and included a profit margin of N10.72 for the NNPC. The government last month tweaked its pricing template for the petrol and reduced pump price from N87 to N86.5 and expects an open market price of N81.55.

By removing subsidy on kerosene and increasing its retail price the government has effectively given up on its long drawn battle to keep the price at N50 which has been unsuccessful for years and has been fraught with corruption and controversies. This is also surprising considering that the current government brands itself as a socially conscious one and as such seem favorably disposed to lower commodity prices for consumers. By taking off subsidy the government has essentially taken off a buffer thought to be enjoyed by the very poor even though in practice they pay above N50 and do not even get the product.

 

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