Confirmation by the Nigerian Customs Service that petrol is still being smuggled out of the country to neighbouring countries is worrisome. The revelation signposts an anomaly in the deregulation of the downstream sector that has recently featured the removal of fuel subsidy, thus shooting up the price of fuel and collaterally invoking inflation in virtually all sectors of the economy, particularly transportation and food items cost. If the additional increase in fuel price in the past week is intended to resolve that misnomer in subsidy removal, then the entire process is work-in-progress, necessitating firm and concerted measures by the authorities to provide measurable reliefs to alleviate the plight of the masses of Nigerians.
To the consternation of Nigerians, the Acting Comptroller-General of the Nigeria Customs Service (NCS), Adewale Adeniyi said there were still cases of smuggling of petrol at some border stations despite the subsidy removal and rising price of petrol in Nigeria. Adeniyi, who made the revelation in Abuja on the sideline of a sensitization workshop on Nigeria Customs Service Act 2023, said though the rate had reduced, there were still cases of smuggling.
Despite the declaration by President Bola Ahmed Tinubu that subsidy on Premium Motor Spirit (PMS), popularly called petrol, had been removed, partly because the product was being smuggled to neighbouring countries at the expense of Nigeria, it is unfortunate that the illicit trade has continued at some national border stations.
For decades, subsidies existed in Nigeria because the Federal Government was fixing the price of petrol for consumers below the international price, and paying for the difference with public fund. With the removal of subsidy, government has stopped, or is believed to have stopped paying for the difference between the price at which the product is sold per litre to consumers and the actual cost of importing the commodity.
Due to the subsidy, the price of petrol in Nigeria was lower than in neighbouring countries, which created an arbitrage opportunity for some traders to buy petrol in Nigeria and sell it in those countries at a higher price. This resulted in the diversion of petrol, for which Nigeria was spending around N400 billion monthly and around N4.8 trillion yearly as subsidy, to neighbouring Benin Republic, Togo and other countries, where it is sold at market prices, while Nigerians face fuel scarcity and long queues at petrol stations.
Giving reasons for total removal of fuel subsidy, President Tinubu said the country could not continue as Father Christmas to neighbouring African countries by providing them subsidised petrol, describing the subsidy as an elephant that could have brought the country to its knees, as it was already struggling to pay salaries.
Stoppage of subsidy was expected to make smuggling economically unattractive and ultimately stop it, since smuggling persists because the perpetrators are still making high profits from it. The fact that fuel is still being smuggled therefore thus elicits some questions: Has Nigeria actually removed subsidy on fuel being imported into the country?; if yes, why is smuggling still thriving?; if no, who is paying for the ‘subsidy’ that still makes smuggling profitable?; is subsidy on fuel consumed in Nigeria real?; have Nigerians been told the whole truth about fuel subsidy in the country?
Possibly, Nigeria may still be losing money as smuggling continues. At some border stations, some Nigerians still cross to neighbouring countries to buy petrol, which they bring to Nigeria for use. The Federal Government must unravel what has continued to attract people to the illicit trade and stop it, if it must reap the full benefits of subsidy removal and actually stop being a Father Christmas to foreigners. The NCS must realize the damage smuggling does to the economy and do everything within its powers to arrest and prosecute culprits. Customs can also deploy technologies that will enable it track movement of petroleum trucks nationwide. The review of the Customs legislation to impose heavy penalties on violators is commendable. The agency should implement the law to the letters in the interest of national development.
As the price of the product rises, President Tinubu’s administration must demonstrate the political will to ameliorate the repulsively poor living condition of most Nigerians by making the nation’s refineries work to activate local refining of petrol.
It is instructive that the volume of the commodity consumed in the country before the removal of petrol subsidy has reportedly dropped by an average of about 18.5million litres with serious consequences for businesses, especially small and medium scale enterprises, and the quality of life of Nigerians.
According to data sourced from the Nigerian Midstream and Downstream Petroleum Regulatory Authority, the total amount of petrol consumed nationwide between January 1 and May 28, 2023 (148 days) when the product was still subsidized was about 9.9 billion litres. That makes the average daily consumption during the 148 days 66.9 million litres. The agency, however, gave the total petrol consumed across the country in the post-subsidy period of June1 and June 28, 2023 as 1.36billion, with the average daily consumption being 48.43million litres. This indicates reduction by 18.5 million of average petrol consumed daily.
The reduction is partly a direct fallout of subsidy removal, indicating that the prices at which the commodity is currently sold nationwide are far beyond the reach of most Nigerians and businesses. In the country noted for its seemingly intractable epileptic electricity supply, businesses that rely on petrol as alternative source of power are now struggling to remain in operation, even with the hike in the prices of goods and services that they produce and provide, which also suffer abysmally low patronage due to the drastic reduction in the purchasing power of the citizens. Many communities are now in constant darkness that further makes them prone to criminal activities. Those who use electricity generators for domestic conveniences can no longer afford to buy petrol. Many car owners now park them at home and pay high fares to go to work in commercial vehicles.
While no effort should be spared in preventing saboteurs from taking over and causing further damage to the economy through smuggling, the government must ensure that its policies and actions do not stifle legitimate business activities and wellbeing of the citizens that are crucial to peace and national development.
END
Be the first to comment