Fuel smuggling: NNPC points at strong lucre pull
Sopuruchi Onwuka
The strong pull to make huge and easy profit by selling subsidized Nigerian petrol across neighbouring African countries has made it very difficult to dissuade smugglers from the illegal trade.
The Nigerian National Petroleum Corporation (NNPC) declared to the national Assembly that the profit incentive has made the trade to continue flourishing despite the concerted efforts by the agencies of the state to combat the menace.
The Oracle Today reports that government has been insistent on ending internal fuel subsidy which has traditionally kept the cost of transportation low for Nigeria’s impoverished populace, but labour and civil society groups insist that price deregulation must only come with complete displacement of importation with local refining.
In a presentation at an interactive session by the Joint Senate Committee on the 2022-2024 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP), Group Managing Director of the NNPC, Mallam Mele Kyari, said with a price difference of over N100 per litre between what is sold in Nigeria and in countries around the nation, it was difficult to cage the activities of petrol smugglers.
He however, stated that NNPC and other agencies in a joint task force have made noticeable progress in combating the menace, the battle was yet to be won.
“As long as there is arbitrage between the price that you sell and what is obtainable elsewhere, you can be sure that it is very difficult to contain the situation,” he said.
He emphasized that the activities of smugglers have also made it difficult for the country to determine the actual consumption figures for petrol, noting that the corporation can only know what was trucked out from loading depots across the country but cannot determine how much of that was consumed in-country.
On the MTEF assumptions, the GMD reiterated a base oil price scenario of $57 per barrel for 2022, $61 per barrel for 2023 and $62 per barrel for 2024 predicated on a base national production of 1.883 million barrels per day in 2022, 2.234 million barrels per day in 2023 and 2.218 million barrels per day in 2024.
Kyari explained that the assumptions were arrived at after consultations with the Ministry of Finance and other relevant stakeholders while also undertaking a careful appraisal of the three-year historical dated Brent Oil Price average of $59.07 per barrel premised on Platts Spot Prices among other considerations.
He reiterated that price growth was to be moderated by the lingering concerns over COVID-19, increased energy efficiency as well as obvious switching due to increased utilization of gas and alternatives for electricity generation.
The Senate Joint Committee session was chaired by Senator Solomon Adeola, with members drawn from the Senate Committees on Finance, National Planning, Foreign and Local Debts, Banking, Insurance, and other Financial Institutions, Petroleum Resources Upstream, Downstream Petroleum Sector and Gas.
