Business - Business & Economy - News - Oil & Gas - September 3, 2021

Why smuggling of petrol will not end in Nigeria soon – NNPC

Says NNPC can only know trucked out of petroleum products from loading depots and not the volume consumed in-country.

MEDIATRACNET

The menace of smuggling of petroleum products, particularly premium motor spirit (PMS), popularly called petrol, would not stop until the existing arbitrage fueled by the prevailing differentials in the pump price of the commodity in Nigeria and her neighbouring countries are resolved, the Nigerian National Petroleum Corporation (NNPC) has said.

The Group Managing Director of the NNPC, Mele Kyari, said in Abuja on Thursday that despite concerted efforts by the Corporation and some Federal agencies, including security agencies to curb the menace, smuggling of petroleum products has continued to thrive.

Last June, Kyari quoted data in the corporation’s monthly financial and operations report which showed petrol consumption in the country for May grew to over 102 million litres per day, from an average of about 60 million litres per day reported between March and April 2021. He blamed it on the growing activities of smugglers of the products.

However, the Minister of State for Petroleum Resources, Timipreye Sylva, said recently that interventions by the government, including joint monitoring operations between the NNPC and the law enforcement agencies like the Economic and Financial Crimes Commission (EFCC), Department of State Services (DSS), Nigeria Customs Service (NCS), Nigerian Security and Civil Defence Corps (NSCDC) and the Police has helped in reducing the volume to about 52 million litres per day.

In a presentation at an interactive session by the Joint Senate Committee on the 2022-2024 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP), Kyari, said with a price difference of over N100 per litre between the retail price of petrol sold in Nigeria and in countries around the country, it was difficult to curtail the activities of petrol smugglers.

Acknowledging the impact of the NNPC’s collaboration with the security agencies in checking the menace, the NNPC GMD said the battle was far from being won.

“As long as there is still arbitrage between the price that we sell petrol and what is obtainable elsewhere around us, we can be sure that it will be very difficult to contain the situation,” he said.

He said 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 the various petroleum products loading depots across the country, but cannot determine how much of that was consumed in-country.

On the MTEF assumptions, the GMD gave 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 said price growth was to be moderated by the lingering concerns over COVID-19 pandemic, 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.

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