REVEALED: Fuel subsidy now gulps N774m daily

The Nigerian National Petroleum Corporation (NNPC) said on Sunday it was subsidising the supply of petrol to the tune of N774 million every day, given the landing cost of the imported fuel and the regulated pump price in the domestic market.

This disclosure is coming a few days after the corporation turned down a freedom of information request by Femi Falana, human rights lawyer, on how much the government was spending on subsidy.

The benefit of this costly subsidy to the national treasury, according to the NNPC, is being enjoyed by only a few as well as in neighbouring countries on the account of the continued smuggling of the fuel across the borders.

Maikanti Baru, NNPC group managing director, has made a passionate plea to the comptroller general of the Nigerian Customs Service, Hameed Ali, a retired colonel, to help check the proliferation of fuel stations in communities with international land and coastal borders across the country.

He said it had energised unprecedented cross-border smuggling of petrol to neighboring countries, making it difficult to sanitise the fuel supply and distribution matrix in the country.

“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,’’ an NNPC statement quoted Baru saying during a visit at the weekend to the customs chief.

Ali and Baru during the visit
“Based on the heightened petrol consumption rate of 50 million litre per day, the corporation was incurring an under-recovery of N774 million every day.”

According to Baru, 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.

He added that this had resulted in a thriving market for Nigerian petrol in all the neighouring countries of Niger Republic, Benin Republic, Cameroon, Chad and Togo and even Ghana which has no direct borders with Nigeria.

The activities of the smugglers, he said, led to recent observed abnormal surge in the evacuation of petrol from less than 35 million litres per day to 60 million litres per day and even to as high as 80 million litres per day as at December last year.

Nigeria imports around one million metric tonnes per annum of petrol due to the poor performance of the four oil refineries managed by the NNPC.

NNPC is the only entity currently involved in the fuel importation after private companies pulled out due to their inability to recoup their investment in their venture.

SOURCE: The Cable