December 6, 2023

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NNPC rejects Customs proposal to stop petroleum smuggling

NNPC Group Managing Director, Mele Kyari

The Nigerian National Petroleum Corporation (NNPC) has rejected the proposal put forth by the Nigeria Customs Service (NCS) on how to stop smuggling of Nigeria’s subsidised petrol.

The Group Managing Director of the NNPC, Melee Kyari, while noting that smuggling of petroleum products is almost impossible to stop, disclosed that the President Muhammadu Buhari, has ordered involvement of security and anti-graft agencies in the war against the economic sabotage.

Kyari stated this in Abuja on Wednesday at the ongoing public hearing organised by the House of Representatives Committee on Finance on the 2022-2024 Medium Term Expenditure Framework and Fiscal Strategy Paper.

The Comptroller General of Customs, Hameed Ali, had while appearing before the same committee on August 16, 2021, said petrol was being smuggled out of Nigeria in large quantities after it had been subsidised by the Federal Government.

Chairman of the committee, James Faleke, on Wednesday asked the GMD to confirm if the NNPC monitored the volume of product imported, distributed and consumed on a daily basis in the country.

Kyari said, “Yes. There is a single point of import, which is the NNPC. And the evacuation data is coming from the records that we receive from the PPPRA.

“I can confirm to you that anytime we supply less than 60 million litres per day – average – consecutively for two weeks, we will see shortages coming on the streets. Sometimes, it is not visible to the public but we see the constraint and we take necessary actions to close those gaps.

“Much as I believe personally that our national consumption may not be 60 million litres per day, I am convinced that anytime you supply less than 60 million litres per day, you will have a challenge here. A number of things are happening.

“Without any contradiction, the oil that we import into this country gets everywhere. It is found in many West African countries. It goes as far as Sudan; we have records to show this.

“It is found in many countries that are proximate to us but as far as the Central African Republic. This is very true. In addition to this, once you have a situation of price arbitrage, everything can happen. And I can confirm that it is very difficult to contain it.”

He added, “Mr President has personally directed me to take every step possible to make sure that we contain the issues around cross-border smuggling; issues around early pilferages in the depots and any involvement of anyone to get this resolved.

“We have taken several steps. We have involved the EFCC, the Department of State Services; we are collaborating and engaging with the Customs Service; we are engaging and collaborating with the Department of Petroleum Resources; and everybody that has a stake in this.

“With the best of action and the best of intention, you will still have a challenge containing cross-border smuggling. As you are aware, we have up to 3000 kilometres of land borders.

“In many of the locations, they practically don’t exist; you don’t need to ply the road to cross into another country. That is the reality. I need your help to contain this but the reality still remains that we are supplying everyone else.”

Faleke also asked the NNPC GMD about the advice given by the Customs boss that the NNPC and private Nigerian investors should establish fuel depots and stations in the neighbouring countries to check smuggling.

Responding, Kyari stated that the NNPC had been skeptical to invest in the potentially ‘bad business’, adding that fuel smuggling would be addressed by the full implementation of the Petroleum Industry Act, which would end the present subsidy regime.

He said, “I have also seen the recommendation by the CG of Customs, that we should go and establish fuel stations across our borders to curtail smuggling. The people who are smuggling are not looking for officially priced petroleum products, unfortunately.

“So, when you go ahead, across the countries, and establish fuel stations…except you are going to see it at N162 (per litre), then everybody will come to you. As long as you are going to sell at the market rate…it is the same reason that is bringing them here to smuggle.

“At the risk of being repetitive, the people who take products across the border will not sell at the official price because when you buy here at N162 and the official price, say in Niger, is N400 per litre, that is what you will buy at the fuel station. So, when you establish a fuel station, you must sell at N400.

“We have thought of this; as a matter of fact, we are already engaging the national oil company of Niger in particular to establish NNPC Retail fuel stations in the country, but we are also conscious of the very fact that it can be a bad business because you are going to compete with the people who are coming to collect (and smuggle).”

He added that at the moment Nigeria exited the regulated environment, smuggling would be curtailed.

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