Nigeria has said that its petroleum distribution programme is being hitched by the activities of cross-border smugglers who divert petroleum products to sell at higher prices in neighboring countries.
In an update issued last weekend, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) smugglers were diverting PMS meant for the Nigerian market to neighboring countries where the prices are significantly higher than the regulated price.
The authority said it was engaging and collaborating with the Nigeria Customs Service to address the issue.
It noted that the price arbitrage between Nigeria and neighbouring countries had continued to grow due to inflation and regional impact of the Russia-Ukraine conflict on global energy value chain.
The authority added that international freight rates and coastal vessels charter rates contributed to the development, adding that the ongoing government effort to rehabilitate strategic Nigerian roads ahead of the rainy season had necessitated rerouting of tanker trucks conveying petroleum products to alternative roads.
This, it said, had increased transit time and associated cost of product transportation.
“The NMDPRA and key stakeholders including NNPC Ltd. have put various measures in place to address the issues.
“The measures include modest adjustment in the cost of product transportation to cater for the impact of high price of automotive gas oil (Ago), known as diesel on transporters, while making special provision of diesel to marketers at a reduced price,” it said.
It listed others as automation of products sales interface and emplacement of a monitoring system in collaboration with government security agencies for distribution of products to retail outlets.
The measures also included extended operating hours both at the loading depots and some selected filing stations, rehabilitation of critical fuel distribution road network through Federal Government’s tax credit scheme by the NNPC and regular stakeholders’ engagements; among others.
It said it had reinforced its monitoring teams and appropriate sanctions to checkmate the activities of erring marketers who were distorting the planned product flow to designated outlets in order to profiteer from price arbitrage have been emplaced.
“As a medium to long term measure, cost-efficient means of transportation, including Autogas conversions and pipeline rehabilitation, are being implemented.
“This will be complemented by end-to-end process automation across the value chain.
“The authority wishes to reassure all Nigerians that there is PMS sufficiency of over 1.6 billion litres as of Jan. 26, 2023 both on land and marine,” it said.
The authority said the NNPC Ltd had additionally made firm commitment to supply more volume of PMS for the months ahead to guarantee national energy security and nationwide availability at the government regulated price.
“NMDPRA appreciates the collaborative efforts of some patriotic oil marketing companies who, despite the glaring incentives to engage in illegal price arbitrage, have stood steadfast and operated responsibly within the approved pricing limits.
“We reassure all Nigerians that NMDPRA would continue to work passionately to ensure energy security and continuous collaboration with relevant stakeholders to restore normalcy in the PMS supply and distribution network within the shortest possible time,” it said.
By Ken Okoye