Nigerian National Petroleum Corporation (NNPC) has said that petrol smuggling to neighbouring nations is being aided by differential prices in Nigeria and other countries.
This was disclosed by the Group Managing Director, Nigerian National Petroleum Corporation, Mele Kyari in a statement signed by the Group General Manager, Group Public Affairs Division, Garba-Deen Muhammad.
According to the statement, Kyari said that with a price difference of over N100 per litre between what is sold in Nigeria and in neighbouring countries, it was difficult to cage the activities of petrol smugglers.
He said while the corporation was working in concert with other agencies to combat the menace and had made noticeable progress, the battle was yet to be won.
NNPC stated, “As long as there is arbitrage between the price that you sell and what is obtainable elsewhere, you can be sure that it is very difficult to contain the situation.”
Kyari emphasised that the activities of smugglers had also made it difficult for the country to determine the actual consumption figures for petrol, noting that the corporation could only know what was trucked out from loading depots across the country but could not determine how much of that was consumed in-country.
Also, NNPC has foreclosed immediate plans to suspend the fuel subsidy regime.
The GMD said the Corporation will have to continue with fuel subsidy till 2022 and, as such, has made provisions for it in the 2022 Appropriation.
“There is an ongoing process that is engaging members of the organized labour, civil society organizations and many other institutions of Government and other critical stakeholders to arrive at a landing on how and when we can exit the subsidy regime to be very precise.
He said the Government is not sure that it can conclude the process of exiting the subsidy regime before the end of 2021 or early 2022, hence the provision of fuel subsidy in the 2022 Appropriation.
On smuggling, he explained that concerted efforts by the Corporation and some Federal agencies to combat the menace of smuggling of petroleum products have been largely hampered by existing arbitrage fueled by the prevailing huge price differentials in pump price of petrol in Nigeria and neighbouring countries.
He said with a price difference of over N100 per litre between what is sold in Nigeria and in countries around the nation, it was difficult to cage the activities of petrol smugglers.
The NNPC GMD said though the Corporation, working in concert with other agencies, has made noticeable progress in combating the menace, the battle was yet to be won.
“As long as there is arbitrage between the price that you sell and what is obtainable elsewhere, you can be sure that it is very difficult to contain the situation,” he said.
He emphasized that the activities of smugglers have also made it difficult for the country to determine the actual consumption figures for petrol, noting that the Corporation can only know what was trucked out from loading depots across the country but cannot determine how much of that was consumed in-country.
On the MTEF assumptions, the GMD reiterated a base oil price scenario of $57 per barrel for 2022, $61 per barrel for 2023 and $62 per barrel for 2024 predicated on a base national production of 1.883 million barrels per day in 2022, 2.234 million barrels per day in 2023 and 2.218 million barrels per day in 2024.
Kyari explained that the assumptions were arrived at after consultations with the Ministry of Finance and other relevant stakeholders while also undertaking a careful appraisal of the three-year historical dated Brent Oil Price average of $59.07 per barrel premised on Platts Spot Prices among other considerations.
He reiterated that price growth was to be moderated by the lingering concerns over COVID-19, increased energy efficiency as well as obvious switching due to increased utilization of gas and alternatives for electricity generation.
The Senate Joint Committee session was chaired by Senator Solomon Adeola, with members drawn from the Senate Committees on Finance, National Planning, Foreign and Local Debts, Banking, Insurance, and other Financial Institutions, Petroleum Resources Upstream, Downstream Petroleum Sector and Gas.