The Cable Report: Nigeria sells the cheapest petrol in West Africa — recipe for smuggling
The Nigerian government has been subsidising the price of petrol for decades.
This has ensured that petrol has remained cheap and affordable for citizens of Africa’s most populous nation; so cheap that it is the cheapest in West Africa.
An analysis by SBM Intelligence showed that Nigeria’s petrol price converted to dollars is 40 cents while those of neighbouring Niger and Benin Republic is 90 cents and 97 cents respectively.
“Petrol in Nigeria costs less than half of what it costs in all of our neighbouring countries, and just about half what it costs in Liberia and Sierra Leone, the next cheapest countries in West Africa,” the research company said.
“On another hand, Nigeria’s daily petrol consumption numbers vary wildly depending on who your source is, and periodic spikes in consumption numbers constantly go unexplained. The subsidy regime in Nigeria provides an economic incentive for smuggling Nigerian petrol to our neighbours.”
Maikanti Baru, former managing director of the Nigerian National Petroleum Corporation (NNPC), had said there had been an uptick in the country’s petrol consumption; giving indications that the product is being smuggled out of the country.
Baru had said 55 million litres of petrol is supplied daily across the country, a trend that began in December 2017.
This is above the projected daily consumption of 35 million litres per day.
“The sudden and unnatural shock in fuel consumption to record levels has over-stretched the direct-sale-direct-supply (DSDP) crude for product supply arrangement which was originally based on 35 million per day petrol consumption pattern,” Baru said.
“Marketers purchase the fuel at a cheaper price of N145 per litre in Nigeria and sell at a higher price in neighbouring countries.”
Mele Kyari, newly appointed NNPC GMD, also echoed the same thoughts.
“The N145 per litre fuel price regime in Nigeria runs against the N350 per litre most of the other West African countries operate, encouraging smuggling,” he said.
“It is even very difficult for us to make the product available at N145.”
WILL SUBSIDY REGIME END SOON?
The Muhammadu Buhari-led administration has not given any indication that it would stop subsiding petrol.
An attempt made by former President Goodluck Jonathan to remove subsidy resulted in nationwide protests tagged #OccupyNigeria.
Zainab Ahmed, former minister of finance, had, however, said the plan is to gradually remove subsidy so that citizens would not feel hardship.
Also, Emmanuel Kachikwu, former minister of state for petroleum resources, had expressed hopes that the completion of Dangote Refinery would ensure that the country becomes self-sufficient in petrol production thus eliminating petrol importation and eventually end the subsidy regime.