The Group Chief Executive Officer of the Nigerian National Petroleum Corporation (NNPC) Limited, Mele Kyari, has revealed that petrol smugglers exploited subsidy loopholes, making around N17 million per truck in neighboring countries.
Kyari made this disclosure while addressing journalists in Abuja on the government’s efforts to deregulate the oil and gas sector.
He explained that cross-border smuggling was rampant due to the fuel subsidy, with a 6,000-liter truck netting smugglers no less than N17 million per trip.
Kyari noted, however, that the same truckload would generate no more than N500,000 if sold within Nigeria, for instance, in a state like Borno.
He further stated that the country has stopped losing such revenue to smuggling since the subsidy was removed, as fuel prices are now adjusted to reflect their true market value.
“In the last 47 years, PMS has always been subsidized and subsidy is creating arbitrage that means there is a different between price in one location, lower than what it should be in another location.
“And when Mr. President announced subsidy in June, what he did was recalibrate the price. There is no longer any value in anyone taking the product across the border. If you do, you’re not going to make those profits than you do.
“In a 6,000 litre truck, you can actually gain up to N17 million from just one truck. How are you going to stop someone who with two trips can just easily make N17 million times two—which is the price of the truck itself.
“However, when you take a truck legally maybe N8 million, say, to Maiduguri, the legitimate value you have is less than N500,000. Why will I see N17 million and then take all the trouble go to Maiduguri, keep it in the fuel station for one month and then make N3 to N4 million. So you see, as long as you are not in a subsidy regime, you won’t lose money,” Kyari said.
What you should know
Nairametrics previously reported that the Nigerian National Petroleum Corporation (NNPC) Limited has raised the price of petrol, with prices now reaching approximately N998 in Lagos and N1,030 in Abuja, the capital.
This marks the second price increase by NNPC in less than two months.
The latest hike comes after reports that NNPCL intends to withdraw as an intermediary in the Dangote Refinery purchase deal, raising concerns about potential future price increases.
Fuel prices have been steadily climbing due to the gradual removal of petrol subsidies, while the government continues to struggle with regulating petrol supply to marketers and filling stations.