Petrol: 58% price difference fuels smuggling to neighbouring countries

Despite the recent subsidy removal, Nigeria’s Premium Motor Spirit, also known as petrol, is still 58 per cent cheaper than what is obtained in neighbouring countries, with smuggling of the product persisting across the borders.

A random sampling of prices in some West African nations – Nigeria, Benin, Ghana, showed average price of N1.671 per litre, which is 58 percent higher than the N1,060 per litre in Lagos.

Data obtained from the domestic markets of the selected nations, indicated that in the Republic of Benin, the product costs Ceffa 600 per litre, an equivalent of $0.97 or N1.649 per litre.

The data also indicated that in Ghana, the product attracts Ghc 14.35 per litre (Super xp), an equivalent of $0.90 or N1, 530 while it costs D77.89 per litre in The Gambia, an equivalent of $1.09 or N1, 853 per litre.

smugglers use waterways, borders, bottles, cans, and porous land borders to conduct large numbers of illegal business.

The checks showed that the operators, including children and women also retail the product freely in cans and bottles across the borders.

Speaking on condition of anonymity, a trader, who claimed to be involved in taking Nigeria’s petrol to Niger, said the business is very profitable.

He said: “I have been doing this for decades. It is a good business because many people in Niger and beyond depend on petrol from Nigeria. The product is always cheaper in Nigeria than in Niger. At the current price of N1,060 per litre in Lagos, it would not be less than N1,400 per litre in Niger Republic.

We observed a lot of smuggling activities — Customs
Confirming to Financial Vanguard, the continued boom in fuel smuggling, the Public Relations Officer, Nigeria Customs Service, Abdullahi Maiwada, said petrol smuggling has continued, adding that more than 10 trucks were seized between June 2024 and the present through the efforts of Operation Whirlwind, “established to combat petroleum product smuggling and diversion in Nigeria.

According to the report on the Operation Whirlwind obtained by Vanguard, the Customs said it intercepted numerous shipments of smuggled petrol, and “disrupted several organised smuggling networks, leading to the detection of smuggling methods and the arrest of key players involved in these illicit activities.”

It maintained that the Customs enhanced border security measures, adding that “all the cases of diversion, aiding and abetting smuggling by the marketers have been handed over to NMDPRA for appropriate sanctions.”

The Customs, which identified complex smuggling networks, limited resources, corruption and threats to lives as major problems, stated: “Between June 2024 and now, we have seized over 650,000 litres of PMS which include more than 10 trucks about to be smuggled to neighbouring countries. We have sealed 17 retail outlets that were involved in aiding and abetting PMS smuggling.

“In terms of the value of seizures, the duty paid value is estimated to be around N700 million. The seizure was recorded across the border areas of Adamawa, Akwa-Ibom, Cross River, Kebbi, Lagos, Ogun and Sokoto states respectively.

“We observed a lot of smuggling activities, product diversion, smuggling of refined products and illegal bunkering around Zone C axis which covers South-South and South-East due to the nature of the terrain, limited manpower and logistics challenges.”

According to Customs, recently more patrol vehicles were added to the Operations Whirlwind thereby opening more areas, including Kwara/Niger, Katsina/Jigawa/Kano and Oyo/Ogun axis for effective operations.

It added: “Operation Whirlwind has made significant strides in combating petroleum product smuggling and diversion in Nigeria. Special Operations continues to face challenges and requires support from stakeholders. By strengthening collaboration, improving intelligence sharing, and enhancing enforcement efforts, Operation Whirlwind can contribute to a more secure and sustainable energy sector in Nigeria.”

We discourage smuggling — NNPCL
Reacting, the spokesman of the Nigerian National Petroleum Company Limited, NNPCL, Olufemi Soneye, said the organisation remains opposed to smuggling.

He said: “We have repeatedly condemned the smuggling of petrol and other products through various ways and means. We have enriched policy formulation, done advocacy and given support to agencies directly involved in tackling smuggling.

“This is not our direct responsibility. NNPC will continue to support measures, targeted at tackling smuggling.”

Petrol smugglers make N17m per truck — Trader, Kyari
Recalled that the Group Chief Executive Officer, NNPCL, Mele Kyari, had cited smuggling as one the reasons for the removal of fuel subsidy, saying that petrol smugglers made as much as N17 million per truck in neighbouring countries before the subsidy removal.

Kyari said: “In the last 47 years, PMS (Premium Motor Spirit) has always been subsidised and subsidy is creating arbitrage. That means there is a difference between price in one location, lower than what it should be in another location.

“And when Mr. President announced the removal of subsidy in June, what he did was to recalibrate the price. There is no longer any value in anyone taking the product across the border. If you do, you’re not going to make those profits.

“In a 6,000-litre truck, you can actually gain up to N17 million from just one truck. How are you going to stop someone who with two trips can just easily make N17 million times two—which is the price of the truck itself?.

“However, when you take a truck legally, maybe N8 million, say, to Maiduguri, the legitimate value you have is less than N500, 000. Why will I see N17 million and then take all the trouble to go to Maiduguri, keep it in the fuel station for one month and then make N3 to N4 million,” the NNPC boss asked the television station.

How subsidised petrol cost Nigeria billions of Naira
However, as part of its national energy security programme, previous governments embarked on massive importation of subsidised petrol; a greater per cent of which was smuggled to other West African nations.

According to the Major Energy Marketers Association of Nigeria, MEMAN, which canvassed for the deregulation of the sector, the government spent over N9.84 trillion on petrol importation between 2006 and 2018 alone.

The association said between 2019 and 2023, billions of Naira were spent to import the product into the nation; stressing Nigeria was subsidizing petrol for other economies in West Africa.

Similarly, the Minister of State for Petroleum Resources (Oil), Sen. Heineken Lokpobiri, said petrol smuggling from Nigeria to neighbouring West African countries continued because the government used to sell its petrol below the landing cost.

He said: “Nigeria plays a very critical role in the energy security in Africa. That is why whatever PMS we import into Nigeria finds its way to the whole of West Africa. That is why smuggling cannot stop.”

“If NNPC imports PMS and sells to marketers at perhaps N600 or below, there’s no way that smuggling can stop because security agents at the borders are also involved.

“When smugglers are taking the products outside the country, even if you put all the policemen on the road, they are Nigerians; you and I know the answer.

“If you put all the customs men on the road, they are Nigerians, you and I know what the problem is, and that is why I’m saying that for Africa to attain energy security, Nigeria has to play a very strategic role.”

With the deregulation, the price of petrol increased from N680 per litre to N1, 060 per litre (Lagos), a development the federal government thought would wipe every incentive to smuggle Nigeria’s imported product to other nations.