Group Chief Executive Officer (GCEO) of the Nigerian National PETROLEUM Corporation Ltd (NNPCL), Mele Kyari, has stated that petrol smugglers hid under subsidy loophole to make around N17 million per truck in neighbouring countries.
The NNPCL boss revealed this in Abuja while addressing the media on government’s efforts to deregulate the oil and gas sector.
According to Kyari, cross-border smuggling was rampant due to the fuel subsidy with a 6,000-litre truck giving the smugglers no less than N17 million per trip.
He, however, added that the same truckload would generate just N500,000 if sold within Nigeria, especially in Borno State.
He nonetheless stated that the country has stopped losing such revenue to smuggling since the stoppage of subsidy, as fuel prices have now adjusted to reflect true market value.
“In the last 47 years, PMS has always been subsidised and subsidy is creating arbitrage; that means there is a different between price in one location, lower than what it should be in another location.
“And when Mr President announced subsidy what he did was recalibrate the price. There is no longer any value in anyone taking the product across the border. If you do, you’re not going to make those profits again.
“In a 6,000 litre truck, you can actually gain up to N17 million from just one truck. How are you going to stop someone who with two trips can easily make N17 million times two, which is the price of the truck itself.”
“However, when you take a truck legally maybe N8 million, say, to Maiduguri, the legitimate value you have is less than N500,000. Why will I see N17 million and then take all the trouble go to Maiduguri, keep it in the fuel station for one month and then make N3 to N4 million. So you see, as long as you are not in a subsidy regime, you won’t lose money,” Kyari said.
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