The Nigerian National Petroleum Corporation Sunday announced that it was spending N774 million daily (about N23.99 billion monthly) as subsidy on the 50 million litres of Premium Motor Spirit consumed in the country.
Maikanti Baru, the NNPC Group Managing Director, said the multiplication of filling stations had energised unprecedented cross-border smuggling of petrol to neighbouring countries, making it difficult to sanitise the fuel supply and distribution matrix in Nigeria.
A statement issued on Sunday by Ndu Ughamadu, the firm’s Group General Manager, Group Public Affairs Division quoted Baru stating this when he led a management team of the corporation on a visit to Col. Hammed Ali (retd.), the Comptroller-General, Nigeria Customs Service in Abuja.
Baru said a detailed study conducted by the NNPC indicated strong correlation between the presence of the frontier stations and the activities of fuel smuggling syndicates, the statement indicated.
He explained that the activities of the smugglers led to the recent 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 with established national consumption pattern.
The NNPC boss stated that 16 states with 61 local government areas as border communities have tanks’ capacity of 144,998 for 700 litres of petrol, accounting for 2,201 registered fuel stations.
In the same vein, he announced that eight states with coastal border communities spread across 24 local government areas accounted for 866 registered fuel outlets with combined petrol tank capacity of 73,443,086 litres.
A breakdown of the findings, according to him, showed that among the states with land border, three local government areas in Ogun State accounted for 633 fuel stations with combined petrol tankage of 40,485,000 litres, while nine local government areas in Borno State had 337 fuel outlets with combined petrol storage capacity of 21,114,480 litres.
“Lagos with one local government area as border community has 235 registered fuel stations with total storage facility of 19, 916, 600 litres,” according to him.
The statement noted that on the coastal front, Lagos with six local government areas led with 487 registered fuel stations with combined in-built storage capacity of 50,239,560 litres.
It said, “Akwa Ibom with five local government areas has 134 registered retail outlets with capacity to store 8,322,986 litres; while Ondo State with two local government areas has 110 fuel stations with capacity to store 3,871,320 litres.”
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, adding that this had resulted in a thriving market for Nigerian petrol in Niger Republic, Benin Republic, Cameroon, Chad and Togo as well as Ghana, which has no direct borders with Nigeria.
He remarked, “The 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 noted that based on the heightened petrol consumption rate of 50 million litre per day, the corporation was incurring an under- recovery of N774 m every day.
Ali said the NCS would work with the corporation 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.
Ali thanked Baru for the elaborate data provided by the NNPC on the fuel supply situation, adding that this would enable the service to fashion out the appropriate architecture to combat the menace.
He called on the authorities to tackle the issue of price differentials, which he noted were the underlying motivation for smuggling activities.
Reacting to the statement by the NNPC, the Petroleum and Natural Gas Senior Staff Association of Nigeria noted that subsidising petrol by N774 million on a daily basis was not sustainable.
PENGASSAN stated that the NNPC was also aware of this, which was why the oil firm had been pushing for the revamp of the country’s refineries.
Fortune Obi, the PENGASSAN spokesperson, told one of our correspondents that international oil companies were also providing assistance for the revamp of the refineries in order to cut down on the importation of petrol.
“The NNPC leadership also knows that it (N774 million daily under-recovery) is not sustainable and that is why they are strongly pushing for the refineries’ turnaround maintenance to put them back into full functionality. I am aware some IOCs are providing support for the rehabilitation,” he added.
The Nigeria Labour Congress faulted the position of the NNPC on the payment of subsidy on petrol, stressing that the corporation’s under – recovery claim was not transparent.
Peter Ozo-Eson, the Secretary-General, NLC, said the importation of fuel should be opened up to competitors and must not be handled by just the NNPC.
Ozo-Eson stated, “Our position from the beginning has been very clear. If we continue this petrol import regime, we will continue to face this type of situation, given that we do not have control over global crude oil prices and the volatility of the exchange rate. These two issues will continue to create situations like this.
“If the NNPC claims to be spending such amount, there is no way for us to determine the actual value that was spent since the National Assembly does not have the power to appropriate subsidy claims. The NNPC cannot come out to tell us that it spent the money that is meant to accrue to the Federation Account on subsidy,” he pointed out.
