The Nigerian National Petroleum Corporation, NNPC, said that it is 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 the NNPC in Abuja, its Group Managing Director, Mr. Maikanti Baru, said this when he led top Management team of the corporation on a visit to the Comptroller General of the Nigerian Customs Service, Col. Hameed Ali (Retd). He 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 milion litres per day, which was in sharp contrast with 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 has energized unprecedented cross-border smuggling of petrol to neighboring countries, making it difficult to sanitize the fuel supply and distribution matrix in the country. He said 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 amongst 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. He said, “In the same vein, eight states with coastal border communities spread across 24 LGAs amongst the states account for 866 registered fuel outlets with combined petrol tank capacity of 73, 443, 086 (seventy three million, four hundred and forty three thousand and eighty six) litres. “A further breakdown of the finding shows that among the states with land border, three LGA’s in Ogun State account for 633 fuel stations with combined petrol tankage of 40, 485,000 (Forty Million and Four Hundred and Eight Five thousand) litres while nine LGA’s in Borno State have 337 fuel outlets with combined petrol storage capacity of 21, 114, 480 (twenty one million, one hundred and fourteen thousand four hundred and eighty) litres.
“Lagos with one LG as border community has 235 registered fuel stations with total petrol storage facility of 19,916, 600 (Nineteen Million, Nine Hundred and Sixteen Thousand, Six Hundred) litres. On the coastal front, Lagos with six LGAs leads with 487 registered fuel stations with combined in-built storage capacity of 50, 239,560 (Fifty Million, Two Hundred and Thirty Nine Thousand, Five Hundred and Sixty) litres. Akwa Ibom with five LGA’s has 134 registered retail outlets with capacity to store 8, 322, 986 (eight million, three hundred and twenty two thousand and nine hundred and eighty six) litres, while Ondo State with two LGA’s has 110 fuel stations with capacity to store 3,871,320 (three million eight hundred and seventy one thousand, three hundred & twenty) litres.”
Baru explained that because of the obvious differential in petrol price between Nigeria and other neighboring 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 neighouring 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. He noted that based on the heightened petrol consumption rate of 50 million litres per day, the corporation was incurring an under-recovery of N774 million every day.
Speaking on the development, the Customs’ boss, 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.
