Group Chief Executive Officer of Nigerian National Petroleum Company Limited (NNPC Ltd), Mele Kyari, has said that the removal of petrol subsidy in Nigeria has effectively eliminated the incentives enjoyed by smugglers.
Mr Kyari, who spoke in an interview with Channels TV, explained that the subsidy created a price disparity between Nigeria and its neighbouring countries, making petrol smuggling highly profitable
He noted that the removal of fuel subsidies in Nigeria has been a game-changer in the fight against cross-border smuggling.
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
For decades, he noted that the subsidy has created a lucrative opportunity for smugglers, who exploit the price disparities between Nigeria and its neighboring countries.
This development represents a positive shift for Nigeria’s energy sector, as it aims to ensure consumers are paying equitable prices for fuel.
Over the past forty years, Premium Motor Spirit (PMS) has consistently been subsidised, fostering an environment of arbitrage—where prices in one location are significantly lower than in another.
When the President announced the removal of the subsidy in June, he effectively recalibrated the pricing structure.
Mele Kyari,
Consequently, there is now little incentive for individuals to smuggle the product across borders, as doing so would no longer yield substantial profits.
