By Osaiyekemwen Confidence
The Nigerian government has mandated that the Nigerian National Petroleum Company Limited (NNPCL) sell petrol at a price higher than the current landing cost of N1,117 per litre. This move is aimed at curbing the smuggling of petroleum products to neighboring countries, according to Heineken Lokpobiri, the Minister of State for Petroleum Resources, who made the announcement in Abuja.
Lokpobiri stressed that raising the price of petrol above the landing cost is crucial to tackle the persistent smuggling issues that have plagued Nigeria’s petroleum sector. He pointed out that some security agencies are complicit in these illegal activities, exacerbating the problem. “Unless NNPC Ltd sells petrol above the landing cost, smugglers will continue to transport petroleum products to neighboring countries,” Lokpobiri stated.
The minister’s directive follows a recent meeting between the Group Chief Executive Officer of NNPCL, Mele Kyari, and the Comptroller General of the Nigeria Customs Service (NCS), Bashir Adewale Adeniyi. The discussion centered on the impact of the NCS’s “Operation Whirlwind,” an initiative designed to reduce petrol smuggling in Nigeria’s border regions. Kyari reported that the daily evacuation of Premium Motor Spirit (PMS) to border states had decreased from 32 million litres to approximately 25 million litres over two months, showing some success in combating smuggling.
The removal of petrol subsidies by the federal government in May 2023 led to an increase in petrol prices from about N197 to roughly N650 per litre. Presently, while PMS sells for an average of N701.99 per litre within Nigeria, it is sold at much higher rates in neighboring countries—N1,672.05 per litre in the Republic of Benin and N2,061.55 per litre in Cameroon. Prices in other regional countries range from N1,427.68 per litre in Liberia to N2,128.20 per litre in Mali, with an average price of N1,787.57, according to data from Trading Economics.
This significant price difference has encouraged increased smuggling of PMS out of Nigeria, as smugglers take advantage of the higher profit margins in neighboring markets. Lokpobiri’s directive to set NNPC’s sale price of imported fuel above the landing cost is intended to close this profit gap and deter smuggling activities that undermine Nigeria’s economic stability.
This policy aligns with the government’s broader strategy to stabilize the petroleum sector and protect Nigeria’s economic interests. However, the effectiveness of this approach in reducing smuggling and maintaining a steady domestic supply of petroleum products remains to be seen.
