About 15.64 million litres of petrol are smuggled out of Nigeria daily. Nigerian petroleum products retail at an average 3.7 times cheaper than those of its neighbours. Which has given smugglers unfair possibilities for arbitrage. This has led to the smuggling of about 15.64 million gallons of petroleum products out of Nigeria in August 2021. Chapel Hill Denham disclosed in a document titled “Dangote Refinery can provide the needed breather for Nigeria’s public finances”
Withdrawal of subsidies, according to the research, could speed up an already pressured inflationary trend. But a stronger fiscal position’s positive spillover could lessen the impact on disadvantaged Nigerians. The report implied that 15.64 million litres on average per day smuggle to the incentives created by fuel subsidies.
The report said,” As of August 2021, the NNPC put PMS domestic consumption at 56.44mn on average per day. In-house in Chapel Hill Denham, we believe the actual number is at least 28% lower. For context, we estimate Nigeria’s actual PMS consumption at 40.6mn litre per day on average, with the balance smuggled to neighbouring West African countries.”
The report said “Going by the figures we got from the World Bank. Households in the bottom 40% of Nigeria’s income distribution account for less than 3.0% of all white product purchases. For proper context, private firms, public transportation services, government agencies, and other business entities consume 75% of all petrol products sold in Nigeria. Against this backdrop, one might conclude that subsidy may have outlived its purpose.”
Currently, fuel shortages have gotten worse in Lagos and Ogun State as filling stations are now charging N185 or more per litre. These prices for Premium Motor Spirit (PMS), also known as gasoline. Besides the new illegal pump price, they also had to tip the gasoline attendants with N400 or more, depending on their negotiating strength.
The Independent Petroleum Marketers Association of Nigeria (IPMAN) showed that some of its members closed down their businesses. This is because they no longer wanted to operate at a loss or under unfavourable circumstances. Closure of these petrol stations has led to the scarcity of the product and the appearance of long queues of vehicles at stations at are still open for business.
-Nairametrics.
