Malam Mele Kyari, Group Managing Director of NNPC, Making a Presentation in the Senate Photo: NNPC

Price differentials fuelling petrol smuggling in Nigerian economy: NNPC

*The Nigerian National Petroleum Corporation explains the disruptive activities of smugglers have made it difficult for the country to determine the ‘actual consumption figures’ for petrol

Gbenga Kayode | ConsumerConnect

Against the backdrop of recent reports about smuggling of petroleum products by some unscrupulous individuals and groups in the economy, the Nigerian National Petroleum Corporation (NNPC) has explained that concerted efforts by the state oil firm and some Federal agencies at combating the menace have been largely hampered.

This the Corporation attributed to the existing arbitrage fuelled by the prevailing huge price differentials in pump price of petrol in Nigeria and neighbouring countries.

RELATED NNPC, EFCC, Other Agencies To Tackle Petroleum Products Smuggling, Oil Theft

Malam Mele Kyari, Group Managing Director (GMD) of NNPC, disclosed this in his presentation at an interactive session by the Joint Senate Committee on the 2022-2024 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP), Wednesday, September 1, 2021, in Abuja, FCT.

Senator Solomon Olamilekan Adeola,Chairman of Senate Joint Committee (left), shares a point with Malam Kyari at the session

Mr. Garba Deen Muhammad, Group General Manager, Group Public Affairs Division of NNPC, in a statement issued in Abuja, FCT, noted the NNPC GMD said with a price difference of over N100 per litre between what is sold in Nigeria and in the neighbouring countries, it was difficult to curtail the activities of petrol smugglers.

Kyari stated though the Corporation, working in concert with other agencies, has made noticeable progress in combating the menace, but the battle against fuel smuggling is yet to be won.

He said: “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.”

The GMD further stressed that the activities of smugglers have also made it difficult for the country to determine the actual consumption figures for petrol.

READ ALSO Kaduna Bans Sale Of Petroleum Products In Jerry Cans Over Increasing Lawlessness

According to him, the Corporation can only know what is trucked out from loading depots across the country, but cannot determine how much of that is consumed in-country.

A cross-section of officials at the interactive session by Joint Senate Committee on the 2022-2024 MTEF and FSP

In respect of the MTEF assumptions, Kyari restated 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.

The assumptions, he said, were arrived at after consultations with the Federal 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 utilisation of gas and alternatives for electricity generation.

The statement said Senator Solomon Olamilekan Adeola, Chairman of Senate Joint Committee chaired the session Wednesday, 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.

Kindly Share This Story