Petrol smuggling amidst subsidy removal
Guardian NigeriaJul 23, 2023 5:03 AM
Confirmation by the Nigerian Customs Service that petrol is still being smuggled out of the country to neighbouring countries is worrisome. The revelation signposts an anomaly in the deregulation of the downstream sector ...

Confirmation by the Nigerian Customs Service that petrol is still being smuggled out of the country to neighbouring countries is worrisome. The revelation signposts an anomaly in the deregulation of the downstream sector that has recently featured the removal of fuel subsidy, thus shooting up the price of fuel and collaterally invoking inflation in virtually all sectors of the economy, particularly transportation and food items cost. If the additional increase in fuel price in the past week is intended to resolve that misnomer in subsidy removal, then the entire process is work-in-progress, necessitating firm and concerted measures by the authorities to provide measurable reliefs to alleviate the plight of the masses of Nigerians.

To the consternation of Nigerians, the Acting Comptroller-General of the Nigeria Customs Service (NCS), Adewale Adeniyi said there were still cases of smuggling of petrol at some border stations despite the subsidy removal and rising price of petrol in Nigeria. Adeniyi, who made the revelation in Abuja on the sideline of a sensitization workshop on Nigeria Customs Service Act 2023, said though the rate had reduced, there were still cases of smuggling.

Despite the declaration by President Bola Ahmed Tinubu that subsidy on Premium Motor Spirit (PMS), popularly called petrol, had been removed, partly because the product was being smuggled to neighbouring countries at the expense of Nigeria, it is unfortunate that the illicit trade has continued at some national border stations.

For decades, subsidies existed in Nigeria because the Federal Government was fixing the price of petrol for consumers below the international price, and paying for the difference with public fund. With the removal of subsidy, government has stopped, or is believed to have stopped paying for the difference between the price at which the product is sold per litre to consumers and the actual cost of importing the commodity.


Due to the subsidy, the price of petrol in Nigeria was lower than in neighbouring countries, which created an arbitrage opportunity for some traders to buy petrol in Nigeria and sell it in those countries at a higher price. This resulted in the diversion of petrol, for which Nigeria was spending around N400 billion monthly and around N4.8 trillion yearly as subsidy, to neighbouring Benin Republic, Togo and other countries, where it is sold at market prices, while Nigerians face fuel scarcity and long queues at petrol stations.

Giving reasons for total removal of fuel subsidy, President Tinubu said the country could not continue as Father Christmas to neighbouring African countries by providing them subsidised petrol, describing the subsidy as an elephant that could have brought the country to its knees, as it was already struggling to pay salaries.

Stoppage of subsidy was expected to make smuggling economically unattractive and ultimately stop it, since smuggling persists because the perpetrators are still making high profits from it. The fact that fuel is still being smuggled therefore thus elicits some questions: Has Nigeria actually removed subsidy on fuel being imported into the country?; if yes, why is smuggling still thriving?; if no, who is paying for the ‘subsidy’ that still makes smuggling profitable?; is subsidy on fuel consumed in Nigeria real?; have Nigerians been told the whole truth about fuel subsidy in the country?


Possibly, Nigeria may still be losing money as smuggling continues. At some border stations, some Nigerians still cross to neighbouring countries to buy petrol, which they bring to Nigeria for use. The Federal Government must unravel what has continued to attract people to the illicit trade and stop it, if it must reap the full benefits of subsidy removal and actually stop being a Father Christmas to foreigners. The NCS must realize the damage smuggling does to the economy and do everything within its powers to arrest and prosecute culprits. Customs can also deploy technologies that will enable it track movement of petroleum trucks nationwide. The review of the Customs legislation to impose heavy penalties on violators is commendable. The agency should implement the law to the letters in the interest of national development.



As the price of the product rises, President Tinubu’s administration must demonstrate the political will to ameliorate the repulsively poor living condition of most Nigerians by making the nation’s refineries work to activate local refining of petrol.

It is instructive that the volume of the commodity consumed in the country before the removal of petrol subsidy has reportedly dropped by an average of about 18.5million litres with serious consequences for businesses, especially small and medium scale enterprises, and the quality of life of Nigerians.

According to data sourced from the Nigerian Midstream and Downstream Petroleum Regulatory Authority, the total amount of petrol consumed nationwide between January 1 and May 28, 2023 (148 days) when the product was still subsidized was about 9.9 billion litres. That makes the average daily consumption during the 148 days 66.9 million litres. The agency, however, gave the total petrol consumed across the country in the post-subsidy period of June1 and June 28, 2023 as 1.36billion, with the average daily consumption being 48.43million litres. This indicates reduction by 18.5 million of average petrol consumed daily.

The reduction is partly a direct fallout of subsidy removal, indicating that the prices at which the commodity is currently sold nationwide are far beyond the reach of most Nigerians and businesses. In the country noted for its seemingly intractable epileptic electricity supply, businesses that rely on petrol as alternative source of power are now struggling to remain in operation, even with the hike in the prices of goods and services that they produce and provide, which also suffer abysmally low patronage due to the drastic reduction in the purchasing power of the citizens. Many communities are now in constant darkness that further makes them prone to criminal activities. Those who use electricity generators for domestic conveniences can no longer afford to buy petrol. Many car owners now park them at home and pay high fares to go to work in commercial vehicles.

While no effort should be spared in preventing saboteurs from taking over and causing further damage to the economy through smuggling, the government must ensure that its policies and actions do not stifle legitimate business activities and wellbeing of the citizens that are crucial to peace and national development.

https://guardian.ng/opinion/petrol-smuggling-amidst-subsidy-removal/amp

Hmm...

This is what happens when an administration utilises a scatter gun approach to resolving issues that require discipline, focus & ingenuity.

Rather than tackle one of the hydraheaded monsters of fuel subsidy, the government abdicated its duty & allowed masses bear the brunt. But has smuggling gone away? No. But the masses are suffering the aftermath.

As long as the FG uses smuggling as one if it's key justifications for removing fuel subsidy, the price of fuel will keep rising arbitrarily because the government will want to keep it high to discourage smuggling rather than tackle the smuggling issue head-on.

Their margin of profit would have dropped terribly.

If indeed it is still happening, it only underscores that our neighbours still sell fuel at a price higher than Nigeria.

However, Nigeria is not losing any money to the smugglers as no subsidy has been paid by the government on the fuel.

Anyone caught smuggling without paying the appropriate Customs duties for such "exportation" should be shot at sight.

We are really a criminal bunch as a nation.

Very weak institutions also that have almost zero level patriotism.

The government's only concern is to have more money they can loot

The numbers of illegal REFINERIES in this country will shock you...

In this same country, some people have wells in their houses that they fetch petrol from to use and sell.

Some families have been in the business of FREE petrol smuggling for more than 20 years...

Since government is not paying for subsidy on the smuggled fuel, I doubt if revenue is lost.

I guess the new custom boss just want to impress his boss or it is me that is not understanding his message.

Our customs officers are the biggest smugglers and we only hear them crying when those boys failed to roger them. Go to Seme border and go and see them bringing in things with their uniforms.

Inna deregulated economy ,smuggling is not the right word to use .


Because it then becomes legitimate business of petrol exportation.
Petrol usage slumped by a whooping 50%, so new buyers will be sought elsewhere

The number one criminal country in the world

FuckSilly:
The numbers of illegal REFINERIES in this country will shock you...

In this same country, some people have wells in their houses that they fetch petrol from to use and sell.

Some families have been in the business of FREE petrol smuggling for more than 20 years...

Where? Can you show us where so that we send the law enforcement agents to do the needful?

Please tell us where? Thank you.

The rate at which petrol is being smuggled out of the country has reduced drastically. FACT!

Not surprised. Price of petrol in Ghana , Benin and Cameroon is now over 800 naira per liter. Niger is at 1041 naira per liter ( effing crazy).

Looks like smuggling would continue. Inflation is hammering a lot of our neighbors. They don't have it good too.

Still, at least we ain't subsidising the smuggled fuel anymore. Not like we have the money with 99% of our revenue being spent on debt servicing

Zxcvbnmghtr:
The rate at which petrol is being smuggled out of the country has reduced drastically. FACT!

But it is still happening.

Fact is, inflation is just as bad in our neighbors, and they are seeing higher price increases.

So till then, people will smuggle

Only benefit is we ain't subsidising our neighbors consumption so to speak

Zxcvbnmghtr:


Where? Can you show us where so that we send the law enforcement agents to do the needful?

Please tell us where? Thank you.

The law enforcement officials knows and they are the major tools and smugglers used to transport the stolen petroleum out of the country through the borders.

Go to seme border and all the border between our neighbouring countries, you'll see them.

Customs should stop heating up the polity. PMS is deregulated; most Nigerians can't afford to buy due to drastically reduced purchasing power, importers will look for alternative market across the border

This was news when our pms was subsidized.

FuckSilly:

The law enforcement officials knows and they they major tools and smugglers used to transport the stolen petroleum out of the country through the borders.

Go to seme border and all the border between our neighbouring countries, you'll see them.

Asari Dokubo was right.

ivandragon:
Hmm...

This is what happens when an administration utilises a scatter gun approach to resolving issues that require discipline, focus & ingenuity.

Rather than tackle one of the hydraheaded monsters of fuel subsidy, the government abdicated its duty & allowed masses bear the brunt. But has smuggling gone away? No. But the masses are suffering the aftermath.

As long as the FG uses smuggling as one if it's key justifications for removing fuel subsidy, the price of fuel will keep rising arbitrarily because the government will want to keep it high to discourage smuggling rather than tackle the smuggling issue head-on.

You are right about the abdication of duty.

The Obasanjo regime always used this smuggling as a major reason why it always adjusted the price of fuel upwards. Other subsequent regimes gave same excuses.

It is very irresponsible of government to pass the burden to the masses.

Apart from this smuggling, Nigeria cannot also afford to pay as the funds is not just available.

If we have the full local refining capacity, the government could provide subsidised crude oil to the refineries so that the finished products would be cheaper than what is available internationally.

That way, we do not spend any funds to subsidise.

Houseontherock1:
Customs should stop heating up the polity. PMS is deregulated; most Nigerians can't afford to buy due to drastically reduced purchasing power, importers will look for alternative market across the border

This was news when our pms was subsidized.

But it is still smuggling if it is contraband goods not allowed for export.

Also if no export duties are paid to the due government agency.

Anybody that wants to take fuel abroad should do that as a personal business. Fuel is no longer subsidized in Nigeria

Since Nigerian government has removed subsidy,it is now transborder trade. If it is not illegal vessels shipment,let customs collect duties on it

Throwback:


But it is still smuggling if it is contraband goods not allowed for export.

Also if no export duties are paid to the due government agency.

Correct. Unfortunately, officials of the Nigerian customs are so used to being bribed while the "exporters" will find ways to bypass them...then the clash of rogues begin. If not for corruption, nothing stops the FG from subsidizing PMS till we have functional refineries

Throwback:


You are right about the abdication of duty.

The Obasanjo regime always used this smuggling as a major reason why it always adjusted the price of fuel upwards. Other subsequent regimes gave same excuses.

It is very irresponsible of government to pass the burden to the masses.

Apart from this smuggling, Nigeria cannot also afford to pay as the funds is not just available.

If we have the full local refining capacity, the government could provide subsidised crude oil to the refineries so that the finished products would be cheaper than what is available internationally.

That way, we do not spend any funds to subsidise.

I can't recall OBJ using smuggling as a primary reason for fuel subsidy removal.

But even then, the APC administration has politicised fuel subsidy removal more than any other government & yet, it is also the one with the least idea of how to handle the matter.

It had 16 years to learn from the mistakes of previous administrations, yet it has been the most opaque & deceptive of all administrations.

ivandragon:


I can't recall OBJ using smuggling as a primary reason for fuel subsidy removal.

But even then, the APC administration has politicised fuel subsidy removal more than any other government & yet, it is also the one with the least idea of how to handle the matter.

It had 16 years to learn from the mistakes of previous administrations, yet it has been the most opaque & deceptive of all administrations.

O yes Obasanjo used that excuse for his incessant price hikes.

I always wondered then why we had to suffer to pay higher prices because our neighbours who were not oil producing as at then, had higher prices that were justified, being dependent on foreign oil.

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Throwback:
Their margin of profit would have dropped terribly.

If indeed it is still happening, it only underscores that our neighbours still sell fuel at a price higher than Nigeria.

However, Nigeria is not losing any money to the smugglers as no subsidy has been paid by the government on the fuel.

Anyone caught smuggling without paying the appropriate Customs duties for such "exportation" should be shot at sight.

The story says, Nigerians cross border to buy fuel in Benin and smuggle into Nigeria. That means it's cheaper than ours

Throwback:


O yes Obasanjo used that excuse for his incessant price hikes.

I always wondered then why we had to suffer to pay higher prices because our neighbours who were not oil producing as at then, had higher prices that were justified, being dependent on foreign oil.

It is sad.

Masses always have to be the ones to make sacrifices, never the political office holders.

What a country in total confusion. If that small of difference exist between pre subsidy removal and post subsidy removal, then what happened to all the petrol they claimed were smuggled out?

Millions of homes in Nigeria no longer put on generator while many car owners no longer drive around like before. That factor alone is enough to cover that small drop in volume of petrol imported into Nigeria. So, I ask again, what happened to all the claims of smuggling petrol?

Throwback:
However, Nigeria is not losing any money to the smugglers as no subsidy has been paid by the government on the fuel.

The same fish brain you people have about basic Economic is the same your leaders have.

How can you say smuggling product isn't losing money by the Government.

So you'll believe because Gov no longer paying subsidy then Gov isn't losing.

Smuggling will surely increase our daily consumption which will directly put more pressure on sourcing for Dollar to get the product into Nigeria since no refinery yet.

According to IPMAN the more Dollar goes up the more we see increase in the fuel price and this will put more pressure on Gov to provide palliative or increase salary.

The smugglers are in the government, armed forces, related to those in government or neighbouring border towns.

Throwback:
However, Nigeria is not losing any money to the smugglers as no subsidy has been paid by the government on the fuel.

So the smuggling can continue? Do you know the Economic sabotage such act constitute to the nation. Even Nigerians can cross into such neighbouring countries to import the same fuel thereby sabotaging the government and country.