Subsidy removal has significantly reduced petroleum products smuggling, says Kyari

Mele Kyari, the group chief executive officer (GCEO) of the Nigerian National Petroleum Company (NNPC) Limited, says the removal of petrol subsidy has significantly reduced cross-border smuggling of the product.

Kyari spoke in an interview with journalists on October 13.

He said the petrol subsidy created a price disparity between Nigeria and neighbouring countries, making smuggling highly profitable.

Kyari said prior to the removal of the subsidy, the price disparity had encouraged smugglers to transfer petroleum products over international boundaries.

The NNPC GCEO said there is currently a noticeable difference in profit between the legal and illegal petrol sales.

For example, he said petrol smugglers could make as much as N17 million on one tanker of petrol, while an oil marketer in Maiduguri, Borno state capital, would only gain about N300,000 to N400,000.

“When Mr. President announced the removal of subsidy in June 2023, it calibrated prices, they came to market, and there is no longer value in anyone taking the products across the border,” Kyari said.

“If you do, you would not make those profits you used to make.”

Speaking on why smugglers preferred neighbouring countries, Kyari said these countries have “taxation on PMS”.

“We do not have tax here. So, on many of these countries, actual government revenue is dependent on the taxes that is coming on PMS,” the NNPC GCEO said.

On May 29, President Bola Tinubu said the petrol subsidy regime was over.

Three months later, TheCable reported that Tinubu was considering a “temporary subsidy” on petrol as crude oil prices and foreign exchange rates soared.

However, Ajuri Ngelale, former presidential spokesperson, said there was no reintroduction of subsidy.

On January 3, the NNPC also denied the return of petrol subsidy, saying it had been removed entirely.

But on April 15, Nasir el-Rufai, former governor of Kaduna, said the federal government was spending more on petrol subsidy than before.

TheCable also reported on August 19 that Tinubu approved a request by the NNPC to utilise the 2023 final dividends due to the federation to pay for the petrol subsidy — but the national oil firm denied the existence of under-rescovery.

However, on the same day, the NNPC said the federal government owes it N7.8 trillion for petrol subsidy.