Tuesday, September 21, 2021

    Nigeria’s cheap gasoline smuggled to neighboring nations, where prices are much higher, NNPC Head Says

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    Naija247news Editorial Teamhttps://www.naija247news.com/
    Naija247news is an investigative news platform that tracks news on Nigerian Economy, Business, Politics, Financial and Africa and Global Economy.

    By William Clowes

    Eliminating subsidies could save the country $2.4 billion
    Government isn’t planning to immediately scrap fuel subsidies

    Nigeria’s cheap gasoline is being smuggled to neighboring West African nations where prices are much higher, the head of the state-owned energy company said.

    While President Muhammadu Buhari’s administration announced the elimination of fuel subsidies in March 2020, an intervention it said could save the cash-strapped state as much as 1 trillion naira ($2.4 billion) annually, it hasn’t followed through. Gasoline prices in Togo, Ghana, Chad and Cameroon are more than double those in Nigeria, according to the Major Oil Marketers Association of Nigeria, which represents the nation’s largest fuel retailers.

    The “prevailing huge price differentials” abets illicit cross-border trade in gasoline, making it impossible to accurately calculate Nigeria’s domestic consumption, Mele Kyari, group managing director of the Nigerian National Petroleum Corp., told lawmakers, according to a summary of his comments circulated by a company spokesman on Thursday.

    Requiring Nigerians to pay more for gasoline is politically risky because many in Africa’s largest crude producer live in extreme poverty and regard affordable fuel as the sole benefit they derive from the country’s oil wealth.

    Gasoline prices were allowed to rise several times in the second half of 2020, but the NNPC has kept them steady since early December, even though crude is trading about 40% higher at more than $70 a barrel.

    The government says it won’t phase out subsidies until it’s concluded negotiations with labor unions. That’s despite a provision in a new oil law signed by Buhari last month that fuel should be sold at market-determined prices.

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