Nnpc explains increase in price of kerosene

A timely topic!

The Nigerian National Petroleum Corporation (NNPC) has recently announced an increase in the price of kerosene, also known as cooking gas, in Nigeria. Here's a breakdown of the reasons behind the price hike:

Reasons for the price increase:

  1. Deregulation of the downstream sector: The Nigerian government has been working to deregulate the downstream sector of the petroleum industry, which means that the government is no longer directly involved in the pricing of petroleum products, including kerosene. As a result, market forces now determine the prices of these products.
  2. Increase in global crude oil prices: The global price of crude oil has been rising due to various factors, including supply and demand imbalances, geopolitical tensions, and OPEC's production cuts. This increase in global crude oil prices has a direct impact on the prices of petroleum products, including kerosene.
  3. Devaluation of the naira: The Nigerian currency, the naira, has been experiencing a significant devaluation against the US dollar. This has made it more expensive for NNPC to import kerosene and other petroleum products, leading to an increase in prices.
  4. Inflation: Nigeria is currently experiencing high inflation rates, which has eroded the purchasing power of the naira. This means that the prices of goods and services, including kerosene, have to be adjusted to reflect the increased cost of living.
  5. Maintenance and upgrade of infrastructure: NNPC has been investing in the maintenance and upgrade of its infrastructure, including refineries, pipelines, and storage facilities. These investments have increased the corporation's costs, which are being passed on to consumers in the form of higher prices.

New prices:

As of March 2023, the new prices of kerosene in Nigeria are:

Impact on consumers:

The price increase is likely to have a significant impact on consumers, particularly low-income households that rely heavily on kerosene for cooking. The increased cost of kerosene may lead to:

Conclusion:

The increase in the price of kerosene is a result of a combination of factors, including the deregulation of the downstream sector, global crude oil prices, devaluation of the naira, inflation, and maintenance and upgrade of infrastructure. While the price increase may be challenging for consumers, it is essential to recognize that the deregulation of the downstream sector is a step towards a more sustainable and efficient petroleum industry in Nigeria.