Group Chief Executive Officer of the Nigerian National Petroleum Company Limited (NNPCL), Mr. Mele Kyari, has revealed startling details about how fuel smugglers exploited the fuel subsidy regime, making up to N17 million per truck on cross-border smuggling operations. Kyari disclosed this information during a media briefing in Abuja, shedding light on the rampant illicit activity that took place before the government decided to remove the fuel subsidy and deregulate the sector.
According to Kyari, the subsidy created an arbitrage system where fuel prices in Nigeria were significantly lower than in neighboring countries, making smuggling highly profitable. He explained that a typical 6,000-litre truckload of petrol smuggled across the border would fetch the perpetrators as much as N17 million per trip. In contrast, the same quantity of petrol, if sold legally within Nigeria, particularly in border states like Borno, would only generate about N500,000.
Kyari stated, “In the last 47 years, PMS (Premium Motor Spirit) has always been subsidized, and this subsidy created arbitrage, a difference between prices in one location versus another. Smugglers took advantage of this gap to make significant profits by diverting fuel to neighboring countries.”
He further emphasized that the government’s decision to remove the subsidy has drastically altered the landscape. The recalibration of fuel prices has erased the profitability of smuggling, as fuel prices are now aligned with international market values. With the absence of the subsidy, there is no longer a financial incentive for smugglers to operate.
Kyari pointed out, “When President Tinubu announced the subsidy removal and adjusted the price, there was no longer any value in transporting the product across borders. The potential profits that once made smuggling attractive have been wiped out.”
The NNPCL boss elaborated on the enormity of the gains smugglers enjoyed under the subsidy regime. He explained that the opportunity to make millions in profits from just two trips made it nearly impossible to deter smugglers. “In a 6,000-litre truck, you could gain up to N17 million from just one trip. Why would anyone, in their right mind, take a truck to Maiduguri to make only N500,000 when they could make N17 million with far less effort?” Kyari asked.
He also stressed that the removal of the subsidy has helped the Nigerian government stop losing significant revenue to smuggling. With the price of fuel now reflecting its true market value, the illegal trade of petrol across borders has become unsustainable. Kyari noted that the reforms have not only addressed the economic losses associated with smuggling but also contributed to stabilizing Nigeria’s fuel market.
“The subsidy removal is a critical milestone in Nigeria’s oil and gas sector. It ensures that legitimate business operations are protected, and it helps to stabilize the market for fuel, ensuring fair pricing for consumers,” he concluded.
Kyari’s revelations further highlight the detrimental impact the fuel subsidy had on Nigeria’s economy and the bold steps being taken by the government and the NNPCL to ensure transparency and efficiency in the oil and gas sector. The efforts to deregulate the market aim to end decades of subsidy-induced smuggling and redirect funds toward more productive sectors of the economy.
