Senator Heineken Lokpobiri, the Minister of State for Petroleum (Oil), has urged the Nigerian National Petroleum Corporation (NNPC) Limited to sell imported fuel above its landing cost as a measure to curb the persistent smuggling of petroleum products across the country’s borders.
The minister made this assertion at the 2024 Energy and Labour Summit held in Abuja, where he also highlighted the complicity of security agencies in enabling smuggling activities.
Lokpobiri, who has been vocal about the challenges facing Nigeria’s oil sector, stated that as long as NNPC continues to sell imported Premium Motor Spirit (PMS) at prices below the landing cost, the menace of smuggling will persist.
He emphasised that the profitability of smuggling is fuelled by the price differential between what NNPC sells within Nigeria and what the product fetches in neighbouring countries.
“If NNPC imports PMS and sells to marketers at perhaps N600 or below, there’s no way that smuggling can stop,” Lokpobiri said.
“When smugglers are taking the products outside the country, even if you put all the policemen on the road, they are Nigerians; you and I know the answer,” he added, pointing to the futility of relying solely on security measures to address the issue.
The minister’s remarks come at a time when Nigeria continues to grapple with significant fuel smuggling activities, particularly along its porous borders with neighbouring countries such as Niger, Chad, and Cameroon.
These countries, which lack sufficient refining capacity, rely heavily on cheaper Nigerian fuel, making smuggling a lucrative business.
The situation has not only deprived Nigeria of much-needed revenue but also exacerbated fuel scarcity in many parts of the country.
Lokpobiri acknowledged that while the government has made efforts to combat smuggling, the problem is deeply entrenched and cannot be fully eradicated without addressing the root causes.
“Fuel smuggling from Nigeria to neighbouring countries is a persistent issue that cannot be fully eliminated,” he noted.
One of the key factors driving smuggling is the significant difference between fuel prices in Nigeria and those in neighbouring countries.
In Nigeria, the government has historically subsidised fuel, keeping prices artificially low.
However, with the recent removal of fuel subsidies, the government is now under pressure to ensure that fuel is sold at a price that reflects its true cost, including the cost of importation.
Beyond smuggling, Lokpobiri also shed light on the challenges posed by Nigeria’s aging pipeline infrastructure, which has been a major factor in economic sabotage through vandalism and crude oil theft.
He revealed that the NNPC lacks the financial resources needed to rebuild the nation’s pipelines, many of which are over five decades old.
“The old, corroded pipelines, some of which date back to the 1960s and 1970s, are easily vandalized,” Lokpobiri explained.
“The reason why pipeline vandalism is very easy to do is because the pipelines have all expired; they are completely corroded. So, anybody can just go and tap it, and the thing is busted.”
To address the infrastructure challenges, Lokpobiri called for a public-private partnership (PPP) model, which he described as a global best practice for managing critical infrastructure.
According to the minister, involving the private sector in the rebuilding and maintenance of Nigeria’s pipeline network is crucial to ensuring a more resilient and secure energy supply system.
“That is why we have to go for the global model – PPP. We have to get the private sector to come in,” Lokpobiri said, emphasizing the need for collaboration between the government and private investors to fund and manage the nation’s oil infrastructure.
The PPP model has been successfully implemented in other countries to address similar challenges, and Lokpobiri believes that Nigeria can benefit from adopting this approach.
He noted that the private sector has the expertise, technology, and financial resources needed to revitalise the country’s ageing infrastructure, which the government alone cannot afford to do.
