• Thursday, July 18, 2024
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Cheap Nigerian petrol floods West Africa, sells above N1,500

Cheap Nigerian petrol floods West Africa, sells above N1,500

Nigerian authorities are grappling with a resurgence of petrol smuggling as the price gap between Nigeria and neighboring countries widens.

With the pump price in Nigeria around N701 per liter, compared to N1,500 per litre in some West African nations, petrol is being diverted out of Nigeria at alarming rates, according to report seen by BusinessDay.

This significant price difference has created a lucrative opportunity for smugglers, who are exploiting the situation to sell the illegally obtained petrol at exorbitant prices in neighboring markets.

The Nigerian government estimates that petrol consumption has skyrocketed to 67 million liters daily, with a substantial portion believed to be smuggled across borders.

This renewed smuggling spree comes just months after the Nigerian government removed fuel subsidies in May 2023. In February of the same year, the government had already been forced to close down over 270 gas stations in an attempt to curb smuggling.

The economic impact of this smuggling is yet to be fully determined, but it raises concerns about fuel shortages within Nigeria and lost revenue for the government. The authorities are likely to intensify efforts to curb this illegal activity in the coming days.

Read also: Petrol subsidy return seen denting Nigeria’s credit rating

Analysts have said there is a lack of transparency among stakeholders in the sector, citing that this development could breed intense smuggling, stealing and pipeline vandalism.

“Subsidy is back. The faster all Marketers have access to dollars and the Nigerian National Petroleum Company (NNPC) Limited isn’t the sole importer the better,” Jide Pratt, country manager of Trade Grid, said.

According to him, the books of the state-owned oil company need to be audited as it is “clearly warehousing this differential in my opinion and needs to be opened up for probity.

He said: “At NNPC retail, petrol sells for N568 per litre in Lagos versus N599 – N610 per litre at other Marketers, that’s a price advantage of N30 – N40 naira per litre. Hard to justify and a lot needs to be done.

“Until the government is no longer the owner of 100 percent shares nothing will change.”

Kelvin Emmanuel, CEO of Dairy Hills Limited, also affirmed that the government is still subsidising the product and according to him, smuggling continues.

In November 2023, Ogbonnaya Orji, Executive Secretary of the Nigeria Extractive Industries Transparency Initiative (NEITI), a government agency, emphasised the grave consequences of oil theft, stressing its detrimental impact on oil exploration, exploitation, economic growth, business prospects, and oil company profits.