Subsidy: NNPC Details How Smugglers Made Millions of Naira From Fuel Trafficking

• The NNPC chief alleged that fuel traffickers made nearly N17 million by taking advantage of the shortcomings in the subsidy program
• Mele Kyari claimed that the fuel subsidy was causing a lot of cross-border smuggling for participant
• He claimed that there was no longer any benefit to anyone bringing the product across the border after the subsidies ended

Legit.ng journalist Zainab Iwayemi has over 3-year-experience covering the Economy, Technology, and Capital Market.

Mele Kyari, the Group Chief Executive Officer of the Nigerian National Petroleum Company Limited, claims that fuel traffickers exploited the subsidy regime's flaws to earn almost N17 million for each truck in neighbouring nations.

The head of the NNPCL told reporters in Abuja that the fuel subsidy was causing a lot of cross-border smuggling and that a 6,000-liter truck could net smugglers for at least N17 million each trip, Channels TV reported.

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“In the last 47 years, PMS has always been subsidised and subsidy is creating arbitrage that means there is a difference between price in one location, lower than what it should be in another location,” he said.

“And when Mr. President announced the removal of 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 than you do.

“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 just 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.”

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On October 9, fuel prices skyrocketed at gas stations all around Nigeria, further hurting the country's citizens who are already grappling with the worst economic crisis in a generation.

The abrupt spike of about 15% to 20% observed at pumps nationwide has not been addressed by the state oil company.

Group proffers solutions to fuel price

Legit.ng reported that President Bola Tinubu has been urged by the Transparency Accountability for Development Initiatives (TADI) to fire the administrators of Nigeria's oil industry due to the petrol crisis rocking the nation.

TADI's programs research and public relations officer, Adeniran Taiwo, responded in Abuja over the weekend to the recent increase in fuel prices by the Nigerian National Petroleum Company Limited (NNPCL), which saw prices rise from N895 to N1,030.

Taiwo also urged President Bola Tinubu to step in and alleviate Nigerians' suffering.

Source: Legit.ng