The Group Chief Executive Officer (GCEO) of the Nigerian National Petroleum Corporation (NNPC) Limited, Mele Kyari, has disclosed that petrol smugglers exploited subsidy loopholes, making not less than N17 million per truck in neighboring countries.
Kyari revealed this on Monday while fielding questions from journalists in Abuja on the government’s efforts to deregulate the oil and gas sector.
The NNPC chief explained that cross-border smuggling was rampant due to the fuel subsidy, with a 6,000-liter truck netting smugglers no less than N17 million per trip.
He, however, noted that the same truckload would generate no more than N500,000 if sold within Nigeria, for instance, in a state like Borno.
The GCEO added that the country has stopped losing such revenue to smuggling since the subsidy was removed, as fuel prices are now adjusted to reflect their true market value.
His words: “In the last 47 years, PMS has always been subsidized 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 subsidy in June, what he did was 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 than you do.
“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 go to Maiduguri, keep it in the fuel station for one month, and then make N3 to N4 million. So you see, as long as you are not in a subsidy regime, you won’t lose money.”
