The federal government has officially announced the removal of subsidy on kerosene, leading to a hike from N50 per litre to N83 per litre. However, the product pricing template released by the Petroleum Products Pricing Regulatory Agency (PPPRA) did reveal that the cost of kerosene at N83 per litre only applies to the Nigerian National Petroleum Corporation (NNPC). This means that independent marketers can sell at a price higher than what is stipulated.

This development by the federal government indicates that it has finally taken heed to the advice of the World Bank after spending N6.9 billion in the last five years trying to subsidise petroleum products during a time when the price of oil is still under pressure. It also gives the government ample opportunity to save about N310 billion spent annually on kerosene subsidy,  accumulating revenue in the excess crude account.

However, the government’s decision to remove the subsidy on a product known to be predominantly consumed by low income earners in the country is questionable. The federal government would need to provide answers to the logic behind selling kerosene at N83 at a time when the global price of oil is below $30, when the price remained at N50 two years ago with the global price of oil over $100.

A hike in the price of kerosene will invariably result in the increased use of less-clean cooking fuels like coal, sawdust and firewood, by low income earners in the country and consequently an increase in the 70 percent of 36 million Nigerian households presently using less-than-clean cooking fuel options. The adverse effect of this is an increase in the number of ill-health and deaths caused by the toxic fumes of these fuels. Another alternative is the use of the domestic cooking gas. The paradox of rich in oil, dependent on firewood is in view and Nigeria would have to battle with deforestation in a few short months from now.