Kerosene subsidy took $1b from FG last year, says Osinbajo

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Vice President Yemi Osinbajo said yesterday that the Federal Government spent $1 billion on kerosene subsidy in 2015.

Osinbajo-Yemi

He lamented about the low usage of Liquefied Petroleum Gas (LPG), also known as cooking gas in Nigeria.

He spoke at the ‘Domestic LPG Implementation Stakeholders Workshop in Abuja, organised by the Office of the Vice President, Ministry of Petroleum Resources and the Nigerian Liquefied Natural Gas (NLNG).

The vice president noted that although Nigeria’s total domestic LPG grew from 50,000 metric tonnes per annum (MTPA) to approximately 400,000 MTPA in 2015 due to NLNG’s intervention, Nigeria’s per capital consumption of 2.5 kilogrammes (KG), remains low compared to its peers in Africa.

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His words: “The low level of LPG consumption in Nigeria has resulted in heavy dependence on kerosene and firewood as primary domestic cooking fuels in majority of approximately 36 million Nigerian households.

“This reliance on kerosene and firewood has substantial economic effect. Government has had to take in huge subsidies, with over $1 billion spent in 2015 on kerosene subsidy. A significantly high rate of deforestation continues to be recorded as over 95.76 million metric tonnes of firewood was used in 2015.”.

Osinbajo said ironically, most of the LPG produced in Nigeria today is exported, declaring that despite the huge export and the fact that the consumption level is low, over 40 per cent of domestic consumption in 2015 was imported.

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He maintained that the huge importation of LPG for domestic consumption impacts negatively on the country’s foreign exchange outlay and limits domestic supply of LPG.

The vice president added that LPG has considerable benefits, which include being more cost-effective and provides better health benefits than firewood and kerosene, both of which have been identified has the cause of more than 50 per cent of over 93,000 deaths.

He highlighted the need to culminate all the various gas and LPG policies with the regulatory framework that would boost the business environment.

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He added that a successful implementation of the intervention strategies would require an investment of up to $25.2 billion over the next couple of years, adding that the investment would be used in providing infrastructure among others.

Minister of State for Petroleum Resources Ibe Kachikwu said there was need to harmonise all the various gas and LPG policies with the regulatory framework that would boost the business environment.

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