The removal of petrol subsidy in Nigeria has effectively eliminated the incentives enjoyed by smugglers, Group Chief Executive Officer of Nigerian National Petroleum Company Limited (NNPC Ltd), Mele Kyari, has said.
Mr Kyari, who spoke in an interview with Channels TV on Sunday, explained that the subsidy created a price disparity between Nigeria and its neighbouring countries, making petrol smuggling highly profitable.
“Before the subsidy removal, the price difference was huge and that incentivised smugglers to move fuel across borders. The removal of the subsidy has effectively calibrated fuel prices, eliminating the profitability of smuggling,” Mr Kyari said.
He noted that the removal of fuel subsidies in Nigeria has been a game-changer in the fight against cross-border smuggling.
For decades, he said the subsidy created a lucrative opportunity for smugglers to profit from the price difference between Nigeria and neighbouring countries.
“This is a positive development for Nigeria’s energy sector, as it can help to ensure that consumers are paying fair prices for fuel. In the last 40-something years, PMS has always been subsidised, and subsidy is creating arbitrage, which means there is a difference between prices in one location, lower than what it should be in another location.
“And when Mr President announced the subsidy in June, 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,” he said.
Premium Times
Leave a Reply