The Nigerian National Petroleum Corporation (NNPC) has explained that in spite of the concerted efforts by the Corporation and some Federal agencies to combat the menace of smuggling of petroleum products, the problem persists because of the existing arbitrage fueled by the prevailing huge price differentials in pump price of petrol in Nigeria and neighbouring countries.
The Group Managing Director of the NNPC, Mallam Mele Kyari stated in a presentation at an interactive session by the Joint Senate Committee on the 2022-2024 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) that with a price difference of over N100 per litre between what is sold in Nigeria and in countries around the nation, it was difficult to cage the activities of petrol smugglers.
Group General Manager, Group Public Affairs Division, Mr. Garba Deen Muhammad quoted Kyari as saying “As long as there is arbitrage between the price that you sell and what is obtainable elsewhere, you can be sure that it is very difficult to contain the situation.”
The GMD emphasised that the activities of smugglers have also made it difficult for the country to determine the actual consumption figures for petrol, noting that the Corporation can only know what was trucked out from loading depots across the country but cannot determine how much of that was consumed in-country.
The GMD also reiterated a base oil price scenario of $57 per barrel for 2022, $61 per barrel for 2023 and $62 per barrel for 2024 predicated on a base national production of 1.883 million barrels per day in 2022, 2.234 million barrels per day in 2023 and 2.218 million barrels per day in 2024.