- Due to the increase in the pump price of fuel, the federal government said the product is being smuggled out of Nigeria to sell in either market
- Compared to other markets with a significantly high price, the cost of fuel in Nigeria averages N701/litre, leaving room for smuggling
- Although this benefited Nigerians, the customs claimed it also provided a financial incentive for smuggling PMS out of the country
Legit.ng journalist Zainab Iwayemi has over three years of experience covering the Economy, Technology, and Capital Market.
The increase in petrol pump prices in neighbouring countries has prompted the federal government to become concerned about the resumption of product smuggling.
Photo Credit: FG, Bloomberg/Contributor
Source: Getty Images
While the average cost of petrol in Nigeria is approximately N701/litre, it is N1,787/litre in neighbouring countries.
This difference in pricing has led to an increase in PMS smuggling out of Nigeria over the last two weeks.
Adewale Adeniyi, the Comptroller-General of the Nigeria Customs Service, revealed this information at a press conference in Yola.
He stated that the NCS and the Office of the National Security Adviser must collaborate to combat the threat.
He recalled that the federal government made the audacious strategic choice to stop providing fuel subsidies around a year ago.
According to Adeniyi, this important action was intended to relieve pressure on Nigeria’s foreign exchange reserves, diversify economic growth, and free up significant money that might be transferred to other productive areas of the economy.
Fuel prices were immediately adjusted and increased to reflect the current situation.
Comparative studies, however, indicate that, despite the financial hardship and inflationary pressures on households, Nigeria continues to have the lowest fuel prices in the West and Central African areas.
Speaking further, Adeniyi said,
“While PMS is sold at an average of N701.99 in Nigeria, it is sold at an average of N1,672.05 in the Republic of Benin and N2,061.55 in Cameroon. In other countries around the region, PMS prices range from N1,427.68 in Liberia to N2,128.20 in Mali, averaging N1,787.57, according to the fuel price data obtained from opensource.”
Opportunity for smuggling
In a Punch report, the customs boss claimed that although this comparative pricing advantage benefited Nigerian people, it also provided a profitable incentive for smuggling PMS out of the country, where costs were two to three times higher.
He claimed that the Nigeria National Midstream and Downstream Petroleum RegulatAuthority’sty’s data on the average daily evacuation of PMS to different states supports this.
“Between April and May 2024, Borno and Kebbi states recorded 76 and 59 per cent increases in evacuations, ranking among the top three states. On a year-on-year basis (May 2023 and May 2024), Sokoto and Taraba states recorded the most substantial increases in evacuations, with 247 and 234 per cent increases, respectively.
“Border states like Katsina and Kebbi also recorded more than 50 per cent increases in evacuation. These discrepancies, along with the price disparity between domestic PMS (N701.99) and neighbouring countries (N1,787.57), raise concerns about the actual delivery of PMS and the potential for smuggling.”
He noted that the operations, which were enabled by the new Customs Act 2023 and directed by reliable intelligence, target unlawful exporting, especially petroleum items, guaranteeing their availability domestically and saving public funds.
CBN adjusts customs FX rate
Legit.ng reported that the Central Bank of Nigeria (CBN) has adjusted the foreign exchange rate for import duties to N1,530 per dollar
The increase represents a 6.13% increase compared to the N1,441.58 adopted on May 6, 2024.
The adjustment was observed on the Nigerian government’s single window trade portal on Friday, May 17, 2024.
Source: Legit.ng