The Group Chief Executive Officer (GCEO) of Nigerian National Petroleum Company Ltd (NNPC Ltd), Mele Kyari, has said that the removal of fuel subsidy in Nigeria has reduced arbitrage.
He explained that it has brought about price parity and equalization, especially with the cross border of prices of fuel.
He spoke in an interview with Channels Television that was aired during its 10 pm news bulletin on Sunday.
He said that cross-border smuggling and arbitrage have for several decades eroded the value subsidy was meant to achieve.
Kyari said: “Subsidy removal brought about price parity and equalization, especially with the cross border of prices of PMS.
“In the last 40 sometime years, PMS has always been subsidized and subsidy is creating arbitrage which means that there is a difference in pricing in one location lower from what it should have been in another location.
“When Mr President announced the withdrawal of value when you came to market, there was no longer anyone taking the product across the border. If you do, you are not going to make those profits.
“The challenge you have in these countries is that there is taxation on fuel. We do not have tax here. In many of these countries, government revenue is dependent on the revenue that is coming from PMS.
“You see that until you balance that, you recover your market cost and add taxation on it, there is no way you will ever get to a situation where there is some kind of market parity between us and our neighbours.
“As long as you are not in the subsidy regime, you will not lose money.”
