The Minister of State for Petroleum Resources, Heineken Lokpobiri has said that the Nigerian National Petroleum Company must sell petrol above the landing cost to curb the smuggling of the products to neighboring countries.
Lokpobiri who said this at the 2024 Energy and Labour Summit in Abuja, added that security agencies are complicit in smuggling activities.
He said unless the NNPC Ltd imports and sells petrol above the landing cost, smugglers would continue to move petroleum products to neighboring countries.
The Group Chief Executive Officer of the Nigerian National Petroleum Company Ltd, Mr. Mele Kyari had last month met the Comptroller General of Nigeria Customs Service (NCS), Mr. Bashir Adewale Adeniyi on the rapid impact of the NCS’ “Operation Whirlwind” in reducing the smuggling of Premium Motor Spirit (also known as petrol) across Nigeria’s border communities.
During the meeting, the NNPC Boss had said PMS evacuation to border states had decreased from 32 million liters per day to about 25 million liters within just two months.
The Federal government had in May last year removed the subsidy on petrol, which raised the price from about N197 to about N650 per litre.
While PMS is sold at an average of N701.99 in Nigeria, it is sold at an average of N1,672.05 in the Republic of Benin and N2,061.55 in Cameroon.
In other countries around the region, the price of PMS ranges from N1,427.68 in Liberia to N2,128.20 in Mali, averaging N1,787.57, according to the fuel price data obtained from opensource.
This development had heightened PMS smuggling out of Nigeria.
Lokpobiri’s submission at the event favours NNPC’s sale of imported fuel at a price above the landing cost to abridge the potential profit gap and disincentivize smuggling of the product to neighbouring countries for high profit making by those involved in the shady business.
The minister said, “If NNPC imports PMS and sells to marketers at perhaps N600 or below, there’s no way that smuggling can stop.
“When smugglers are taking the products outside the country, even if you put all the policemen on the road, they are Nigerians; you and I know the answer (response).”
Lokpobiri said that fuel smuggling from Nigeria to neighboring countries was an issue that could not be entirely eradicated.
He took the opportunity of the summit to explain that the NNPC Limited lacks the funds necessary to rebuild the nation’s aging pipelines, which contribute to economic sabotage through pipeline vandalism and crude oil theft.
He said, “The old, corroded pipelines, some of which date back to the 1960s and 1970s, are easily vandalized thus facilitating the illegal transport of fuel.
“The reason why pipeline vandalism is very easy to do is because the pipelines have all expired; they are completely corroded. So, anybody can just go and tap it, and the thing is busted.”
The minister stated that even with increased crude oil production, “the challenge lies in transporting it to terminals due to the deteriorated state of the pipelines.”
Lokpobiri called for a public-private partnership to address the infrastructure issues, saying, “That is why we have to go for the global model – PPP. We have to get the private sector to come in.”
He said there was the need for Nigeria to play a strategic role in ensuring energy security across West Africa, stressing that “Nigeria plays a very critical role in the energy security in Africa.”
Lokpobiri expressed concerns about supply of crude oil to local refineries, including the Dangote Refinery, noting that without increased production, meeting domestic and export obligations would be challenging.
He added, “Our ambition is to ramp up production. It is only when we ramp up production that the midstream and the downstream can also be successful.
“Supporting local refining is the way to go. We can look for investors to explore and bring out this crude, so that we will be able to meet both our domestic obligations and also export some to be able to raise more dollars and meet our obligations.”
He underscored the importance of ramping up production to support local refining and ensure healthy competition among refineries.