Data obtained by BusinessDay found that Nigeria’s daily consumption of Premium Motor Spirit (PMS) – petrol – is currently at an unsustainable level of 103 million litres per day.
The lopsided pattern of consumption is seen in the huge volumes of imported petrol going to Nigeria’s border states. More petrol trucks ply border states than commercial centres, the clearest proof that these were being smuggled.
For example, Adamawa State, which shares border with Cameroon, consumed 68.8 million litres of petrol for the month of June, while a much commercial Ondo State that boasts of higher Internally Generated Revenue (IGR) per head of N7,165 consumed 59.6 million litres same period.
Another state comparison carried out is between Ogun State, a border state with Benin Republic that also boasts of an IGR per head of N7,140, and Rivers State with an IGR per head of N22,505.
“There is no doubt that Nigeria’s present petrol consumption is embarrassing due to smuggling, which is currently a thriving business,” Mike Osatuyi, national operations controller, Independent Petroleum Marketers Association of Nigeria, told BusinessDay.
Recently, Mele Kyari, group managing director, Nigerian National Petroleum Corporation (NNPC), said the current situation had continued to bleed the country as it could not sustain the payment of subsidy.
“In very recent data, we see what we really want at the beginning of May and June. There was a day we loaded out about 103 million litres of PMS within one day across the depots. We know it is not required, we know it is inappropriate and we also know that something wrong is happening,” Kyari said.
Kyari explained that with the current exchange rate, the pump price of petrol should be N256 per litre, but Nigeria sells at the pump for N162.
NNPC data show that petrol subsidies soared by 397 percent over a four-month period, from a monthly cost of N25.37 billion in January 2021 to N126.30 billion in April.
In June, Kyari said the country now spent as much as N140 billion to N150 billion on subsidies each month.
At an average cost of N120 billion on petrol subsidy monthly, Nigeria is set to burn N1.44 trillion on subsidy by December 2021.
Apart from these losses, oil thieves are boring holes in pipelines and siphoning crude oil, an activity costing the country a fortune.
According to the May 2021 Federal Allocation Accounts Committee report, Nigeria spent N4.1 billion to safeguard the assets with over N1.5 billion alone going to fix ruptured points that month alone.
Last month, Lai Muhammadu, minister of information, citing NNPC data, said the Federal Government spent N60 billion yearly securing the pipelines, saying that over 200,000 barrels per day (bpd) were stolen from the pipelines.
At the $72 per barrel forecasted average oil price for 2021, this translates to an annual loss of $5.256 billion this year. When converted at the current exchange rate, Nigeria could be losing an estimated N2.155 trillion by December.
Conservative estimates put the total leakages from oil theft and petrol subsidy to over N3.5 billion by the end of the year
This pattern of leakages accounts for why over five decades of oil exploration with years of booms, Nigeria is home to the world’s poorest people.
The Nigerian Extractive Industries Transparency Initiative (NEITI) 2019 report on Nigeria’s extractive sector revealed other disturbing patterns of leakages to include poor accounting practices and poor regulation.
NEITI observed that some companies reported crude losses due to metering error, theft and sabotage that were higher than the volume of production the government could tax.
“Companies reporting crude losses higher than fiscalised production imply that the Federation is losing benefits from the production arrangement,” NEITI observed.
Analysts say the benefits of oil have also been impacted by the rent-seeking behaviour of operators, rampant corruption by public officials and broken government institutions trampled upon by rapacious military juntas and perverse politicians.
For a highly indebted country, this pattern of leakages is unsustainable.
