House of Representatives committee on petroleum resources (Downstream) has advocated the use of Micro Finance Banks to end scarcity of Kerosene in the country.
The committee expressed worry over the scarcity of the product and urged the major stakeholders in oil and gas industry to involve micro finance banks across the country in distribution of the product.
The Committee members, who were interacting with stakeholders at Calabar Free Trade Zone decried the activities of middlemen in the industry and suggested the intervention of micro finance banks to reduce prices of kerosene.
Speaking on behalf of the committee, the Chairman Dr Joseph Akinlaja commended stakeholders for safety measures taken so far and suggested how to make kerosene affordable, unadulterated and manageable, especially intervening through the micro finance banks on the product distribution.
Akinlaja said: “We came here to assess and see how kerosene can be affordable to all at high quality and low price.
“We commend the depots for their planed investment in hydro-carbon because the future of Nigeria depends on gas. Well CFTZ is an asset to the Nigeria’s economic development. We have come to know why kerosene is expensive and also come to ask the players –those in supply and distribution-in the industry what way forward. We are actually concerned with kerosene explosion as a result of no fault of theirs.
“We have identified a whole lot of problem ranging from haulage, distribution to surface tanks issues. And we want to see how these challenges can be reduced to a minimal level”.
Welcoming the Committee, the Managing Director of Fyn field Fynefield, Petroleum, Mr Akshay Saxena said since cardinal points of the Committee’s visit was to make sure the right price of kerosene got to the consumer in quality and at cheaper rate.
Saxena explained that between the time of depots’ sells and distribution to the surface tanks owners, there are lots of price differentials in between, adding that most people who retail the product were mostly surface tank owners sometimes who sells in large quantity more than filling stations.
According to him, most of retailers of kerosene are mostly house wives, little business women and men who can sell between 5, 000 and 10, 000 litres of kerosene but cannot stock up their tanks as they don’t have enough money to pay in bulk to suppliers.
The MD said: “But the middlemen who have money to pay and buy large quantity would end up getting some discounts from depots.
“They then go back to these retailers and charge huge credit from these surface tanks owners and they end up hiking the price enormously.
“So, because the surface tanks owners are getting it from bulk, buyers/middlemen on credit have no option than to accept it.
“So, you find a situation whereby a depot that sells a litre of kerosene for instance at N135 to middlemen would end selling it to end user at N200 to these surface tanks owners who also in turn would add additional N5 or N10 to make profit, thereby selling to end user at N210.
“So as government price increases, this has been the case in the last two years, so also do retailers increase to remain in the market. Also this is because of supply demand theory.
I”, therefore, suggest that government should create a platform whereby the microfinance banks come into the picture and take the position of these middlemen, who buy product and supply on credit at exorbitant rate to surface tanks owners.
“By empowering micro finance banks to fill up the gap, they would have ended up doing one of their lines businesses, which is to provide opportunity for people at micro level do businesses.
“Besides, they would act as a bridge between the supplier and the end user, hereby ensuring that the right pricing gets to them, the price that would not be transferred from the depot to the end user.”
He, however, advised that Department of Petroleum Resources, DPR, to regulate the micro finance banks to ensure that those surface tanks owners were actually surface tanks.