Last week, Group Managing Director of the Nigerian National Petroleum Corporation, Mele Kyari, announced that the Corporation has had to pay between N100 billion and N120 billion per month to keep the retail pump price of Premium Motor Spirit (PMS) at N162.
Refusing to admit to paying subsidy, Kyari insisted that the actual cost of importation and handling charges amounted to N234 per litre of petrol, as the product is popularly called. This new admission meant that the federal government through the corporation paid an average of N4 billion daily to subsidise petrol.
This tallies with the estimate made by New National Star earlier this month. Marketers in the downstream sector of the Nigerian oil and gas believe that since the statement has been made by Kyari, then the Federal Government is willing to stop payment of petrol subsidy for good and it will happen soon. Mike Osatuyi, National Operations Controller, Independent Petroleum Marketers, told this newspaper that although there was no slated time for the petrol price hike, it was to be expected and could not be derailed.
He said, “We don’t know when it (the new ex-depot price) will be effective until they effect it in the ex-depot price. They are still selling at the old price. But they have said it will be done soon. As they have said they are still consulting and they must have done their homework before they can increase the price.” Petrol in Nigeria has continued to be subsidised by the government making it subject to smuggling.
A recent report by German news station, Deutsche Welle (DW) through investigations found that traders made huge profits in Cameroon through illegal sale of Nigerian petrol. The stolen petrol is sold significantly lower than what legal petrol stations in Cameroon sell.
Retail pump price of petrol in Cameroon, a country that shares a 1,227-mile border with Nigeria, is sold in the naira equivalent of N436.48, while petrol cost N164.09 per litre in Nigeria according to the most recent newsletter of the Major Marketers Association of Nigeria (MOMAN). This huge difference makes smuggling lucrative.
Some industry experts have said that even during the 2020 lockdown due to the pandemic, the Nigerian consumption of fuel did not reduce which pointed in the direction of smuggling. Chairman of MOMAN, Adeunji Oyebanji, said in February that more focus had to be paid to initiatives that could be adopted to ease the impact of petrol subsidy removal.
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