Traders Buy Cheap Petrol in Nigeria to Sell for N1,700/litre in Other Markets

• Due to the increase in the pump price of fuel, the federal government said the product is being smuggled out of Nigeria to sell in other markets
• Compared to other markets with a significantly high price, the cost of fuel in Nigeria averages N701/litre, leaving room for smuggling
• Although this benefits Nigerians, the customs claimed it also provided a financial incentive for smuggling PMS out of the country

Legit.ng journalist Zainab Iwayemi has over three years of experience covering the Economy, Technology, and Capital Market.

The increase in petrol pump prices in neighbouring countries has prompted the federal government to become concerned about the resumption of the product's smuggling.

While the average cost of petrol in Nigeria is approximately N701/litre, it is N1,787/litre in neighbouring countries.

This difference in pricing has led to an increase in PMS smuggling out of Nigeria over the last two weeks.

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Adewale Adeniyi, the Comptroller-General of the Nigeria Customs Service, disclosed this at a press conference in Yola, Adamawa state.

He stated that the NCS and the office of the National Security Adviser must collaborate to combat the threat.

He recalled that the federal government made the audacious strategic choice to stop providing fuel subsidies around a year ago.

According to Adeniyi, this important action was intended to relieve pressure on Nigeria's foreign exchange reserves, diversify economic growth, and free up significant money that might be transferred to other productive areas of the economy.

Recall that after the removal of fuel subsidy, fuel prices were immediately adjusted and increased to reflect the current situation.

Comparative studies, however, indicate that despite the financial hardship and inflationary pressures on households, Nigeria continues to have the lowest fuel prices in the West and Central African areas.

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Speaking further, Adeniyi said,

“While PMS is sold at an average of N701.99 in Nigeria, it is sold at an average of N1,672.05 in the Republic of Benin and N2,061.55 in Cameroon. In other countries around the region, PMS prices range from N1,427.68 in Liberia to N2,128.20 in Mali, averaging N1,787.57, according to the fuel price data obtained from opensource.”

Opportunity for smuggling

In a Punch report, the customs boss claimed that although this comparative pricing advantage benefited Nigerian people, it also provided a profitable incentive for smuggling PMS out of the country, where costs were two to three times higher.

He claimed that the Nigerian Midstream and Downstream Petroleum Regulatory Authority's (NMDPRA) data on the average daily evacuation of PMS to different states supports this.

“Between April and May 2024, Borno and Kebbi states recorded 76 and 59 per cent increases in evacuations, ranking among the top three states. On a year-on-year basis (May 2023 and May 2024), Sokoto and Taraba states recorded the most substantial increases in evacuations, with 247 and 234 per cent increases, respectively.

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“Border states like Katsina and Kebbi also recorded more than 50 per cent increases in evacuation. These discrepancies, along with the price disparity between domestic PMS (N701.99) and neighbouring countries (N1,787.57), raise concerns about the actual delivery of PMS and the potential for smuggling.”

He also said the operations, which were enabled by the new Customs Act 2023 and directed by reliable intelligence, target unlawful exporting, especially petroleum items, guaranteeing their availability domestically and saving public funds.

CBN adjusts customs FX rate

Legit.ng earlier reported that the Central Bank of Nigeria (CBN) adjusted the foreign exchange rate for import duties to N1,530 per dollar

The adjustment was observed on the Nigerian government's single window trade portal on Friday, May 17, 2024.

Proofreading by James Ojo Adakole, journalist and copy editor at Legit.ng.

Source: Legit.ng