Business
Kerosene jumps to N83 as FG dumps subsidy
The price of Household Kerosene (HHK) jumped from N50 per litre to N83 per litre over the weekend, as the Federal Government officially ended subsidy on the product.
The product may however sell at higher prices, as the Petroleum Products Pricing Regulatory Agency (PPPRA) stated that the N83 per litre price applies only to the Nigerian National Petroleum Corporation (NNPC).
This means that other petrol stations and independent marketers can sell higher than the stipulated amount.
This was contained in the PPPRA product pricing template released at the weekend.
The development is coming at a time the international price of crude oil has dropped to a record low, even as government announced a reduction in the price of Premium Motor Spirit (PMS) late last year.
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.
Read also: Osinbajo seeks tax reforms to minimise economic crisis
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 to marketers, at N68.70 per litre, official ex-depot price for collection, N73 per litre while ex-coastal price is N68.02 per litre.
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