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FG spends $1bn on kerosene subsidy in 2015 – Osinbajo

THE Federal Government, on Tuesday, announced that about $1billion was spent on kerosene subsidy in 2015, due to the low usage of Liquefied Petroleum Gas (LPG), popularly referred to as cooking gas in Nigeria.

“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,” it lamented.

The Vice-President, Professor Yemi Osinbajo, made this known 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).

According to him, “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.”

He explained that in spite of the fact that Nigeria’s total domestic LPG grew from a low of 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), however, remains low compared to its peers in Africa.

Professor Osinbajo further stressed that the low consumption of LPG was irrespective of the superior health, environment and energy costs of LPG over other competing fuels, such as kerosene, saying most of the LPG produced in Nigeria today, was exported.

“Despite the huge export and the fact that our consumption level is low, over 40 per cent of our domestic consumption in 2015 was imported”, he bemoaned.

The vice-president, who maintained that the huge importation of LPG for domestic consumption impacts negatively on the country’s foreign exchange outlay and also limits domestic supply of LPG, then affirmed that LPG has considerable benefits.

This, according to him, is more cost-effective; and provides better health benefits than firewood and kerosene, both of which has been identified has the cause of more than 50 per cent of over 93,000 deaths.

Professor Osinbajo added that the Federal Government was considering a number of interventions in the LPG industry that would among others lead to a significant reduction in the rate of deforestation and create millions of direct and indirect employment opportunities for Nigerians.

Earlier, the Minister of State for Petroleum Resources, Dr Ibe Kachikwu, highlighted the need to culminate all the various gas and LPG policies with the regulatory framework that would boost the business environment.

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, saying the investment would be used in providing infrastructure among others.
Also speaking, Managing Director of Nigeria LNG, Mr Tony Attah, said to unlock the potentials of the LPG industry, the Federal Government should intervene by removing fiscal and regulatory bottlenecks necessary for creation of a conducive business environment for private sector investment in all segments of the value chain.