Subsidy: Deregulation’ll Stop Smuggling.
Against the backdrop of the declaration by the Nigerian National Petroleum Corporation that petrol consumption had risen to 50 million litres daily, the Federal Government has been adviced to fully deregulate the downstream sector to reduce the smuggling of Premium Motor Spirit (petrol) to neighbouring countries.
The NNPC made the announcement on Sunday that it was spending N774m daily (about N23.99bn monthly) as subsidy on the 50 million litres of PMS consumed all over the country.
The Group Managing Director, NNPC, Dr. Maikanti Baru, said the abundanc of filling stations had energised unprecedented cross-border smuggling of petrol to neighbouring countries, making it difficult to sanitise the fuel supply and distribution matrix in Nigeria.
However, the Executive Secretary, Major Oil Marketers Association of Nigeria, Mr. Obafemi Olawore, told our correspondent in a telephone interview on Monday, “You know they (NNPC) are the one bringing in the product, and they are the one that know what they are bringing. So, I think we should give them that benefit of the doubt that they know what they are saying.
“Whether 50 million is our normal consumption level or not is a different matter. But we are not in normal times; when you are coming out of scarcity, what you do is to send more to the market.”The permanent solution is to deregulate because the price in Nigeria is cheaper, he said.
“Some weeks ago, I was in Ghana and a litre of petrol was sold for 4.49 cedi, which translates to about $1.04. That’s almost N380 per litre. So, there is the attraction to smuggle. In Cotonou, it goes for about N225 per litre, which is the closest neighbour to Nigeria. So, the farther away you go from Nigeria, the higher will be the price and the incentive to smuggle,” he added.
Olawore described the nation’s borders as porous, adding that it was not easy to police the large expanse of land at the borders.
“It boils down to fear of the unknown and fear of reaction of labour and civil society groups; I think legislators are ready to support deregulation but the executive is not too keen because of perceived fear of high prices coming up later on, even if it is wrongly placed,” he noted.
The MOMAN scribe said that without deregulation, the country would continue to spend its scarce foreign exchange on importation of petroleum products and smuggling would continue.
“It also means that you are using your own foreign exchange to subsidise other countries’ consumption,” Olawore added.
Meanwhile, the Depot and Petroleum Products Marketers Association of Nigeria said it had suspended its threat to sack workers as a result of the delay in the payment of the subsidy debt owed its members by the Federal Government.
“Following the 14-day ultimatum to commence staff disengagement given to the Federal Government by the DAPPMAN in the light of over N650bn owed by Federal Government to petroleum marketers, a series of constructive engagements and meetings were held with the NNPC, Ministry of Labour, the Presidency and DAPPMAN/MOMAN,” DAPPMAN said in a statement on Monday.
The marketers said they had been reassured of the government’s commitment to make payment as evidenced by the request for approval for appropriation of same to the National Assembly.
The statement signed by the association’s Chairman, Mr. Dapo Abiodun, and the Executive Secretary, Mr. Olufemi Adewole, said, “It is our hope that this approval will be given promptly and these long overdue payments made subsequently.
“Consequently, DAPPMAN/MOMAN hereby suspend the issued 14-day ultimatum and use this medium to plead with all our staff under the various umbrella unions: NARTO, PENGASSAN, NUPENG/PTD to please bear with us while this approval for appropriation by the National Assembly is being deliberated on and processed, which we believe will not exceed two weeks in view of the adverse implications of any delays.”
