5 March 2018

Nigeria: NNPC Incurring N774m Subsidy Daily - - Baru

Photo: Vanguard
Fuel pump.

Nigerian National Petroleum Corporation, NNPC, yesterday, disclosed that it was incurring an under recovery of N774 million daily based on the questionable increase of Nigeria's fuel consumption to 50 million litres per day.

Under recovery, a situation whereby the NNPC is incurring the cost of the differential between the official pump price of premium motor spirit, also known as petrol, and the actual cost of the commodity, is another term for subsidy, since the official price is lower than the actual market price.

According to a statement by NNPC in Abuja, its Group Managing Director, Mr. Maikanti Baru, who stated this when he led top management team of the corporation on a visit to Comptroller-General of Nigeria Customs Service, Col. Hameed Ali (retd), blamed the increase in fuel consumption on massive smuggling of petroleum products to neighbouring countries.

He insisted that the activities of the smugglers had led to recent observed abnormal surge in the evacuation of petrol from less than 35 million litres per day to more than 60 million litres per day, which was in sharp contrast to established national consumption pattern.

Baru also raised an alarm on the proliferation of fuel stations in communities with international land and coastal borders across the country, insisting that the development had energized unprecedented cross-border smuggling of petrol to neighbouring countries, making it difficult to sanitise the fuel supply and distribution matrix in the country.

He revealed that detailed study conducted by the NNPC indicated strong correlation between the presence of the frontier stations and the activities of fuel smuggling syndicates.

Providing a detailed presentation of the findings, the NNPC boss noted that 16 states, having among them 61 local government areas with border communities, account for 2,201 registered fuel stations.

The fuel tank of the petrol stations, he noted, had a combined capacity of 144.998 million litres of petrol, about four times more than Nigeria's average fuel consumption of 35 million litres daily.

Baru explained that because of the obvious differential in petrol price between Nigeria and other neighbouring countries, it had become lucrative for the smugglers to use the frontier stations as a veritable conduit for the smuggling of products across the border, saying this had resulted in a thriving market for Nigerian petrol in all the neighbouring countries of Niger Republic, Benin Republic, Cameroun, Chad and Togo and even Ghana which has no direct borders with Nigeria.

"NNPC is concerned that continued cross-border smuggling of petrol will deny Nigerians the benefit of the Federal Government's benevolence of keeping a fix retail price of N145 per litre, despite the increase in PMS open market price above N171 per litre," he said.

Speaking on the development, Customs' Comptroller-General, Hameed Ali, said the service would work with the NNPC to stem the tide of cross-border smuggling of petroleum products, noting that all hands must be on deck to ensure the economic survival of the country.

He commended the NNPC for the elaborate data provided on the fuel supply situation, noting that this would enable the service fashion out the appropriate architecture to combat the menace.

He also called on the authorities to tackle the issue of price differentials which is the underlying motivation for smuggling activities.

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