Petrol consumption: NNPC’s alarming figures, by Jerry Uwah

Nigeria is in deep trouble.
The federal government is worried, but no one knows the way out.
The sad news is that Nigeria spent $5.8 billion on petrol imports in just two months.
At the current official exchange rate of N305 to the dollar, the Nigerian National Petroleum Corporation (NNPC) has spent N1.7 trillion on petrol imports in just two months.
The corporation is now the sole importer of petrol.
The irony of the calamitous development is that no one monitors NNPC’s monopoly in fuel importation.
Even when the Pipelines and Products Marketing Company (PPMC), Department of Petroleum Resources (DPR), Petroleum Products Pricing Regulatory Agency (PPPRA) and the Federal Ministry of Finance were monitoring the importation of subsidized petrol, a grand conspiracy with dubious marketers allowed the government to be swindled to the tune of N1.7 trillion.
Now with NNPC as the sole importer, financier, auditor and regulator of petrol imports, one could only imagine the audacity in the transactions.
NNPC became the sole importer of petrol since November 2017 when its landing cost exceeded the decreed official pump price of N145 by N26 and forced private sector marketers out of petrol import business.
Unfortunately, even with an acclaimed daily subsidy of N744 million, the National Bureau of Statistics (NBS) puts the average pump price of petrol in January at N191. The subsidy is only enjoyed in Abuja and Lagos.
NNPC claims that petrol consumption suddenly surged from 30 million litres per day to 55 million litres and might rise to 100 million litres.
It blames smugglers for the alarming upsurge in petrol consumption.
The corporation argues that smugglers divert petrol to a number of retail outlets that suddenly emerged at border towns.
In other words, petrol consumption has suddenly doubled because of the quantity smuggled into Benin, Togo, Chad and Niger republics.
NNPC’s argument lacks logical coherence and economic congruence.
The total consumption of petrol in the four countries put together is less than 10 million litres per day.
Unfortunately, NNPC’s argument suggests that the quantity of petrol smuggled into the four impoverished countries is equal to the quantity consumed by 192 million people in a relatively more prosperous Nigeria.
The total population of the four impoverished countries now being fed by petrol from Nigeria is a scant 53 million with a standard of living abysmally lower than Nigeria’s.
The quantity of petrol consumed by the four countries is about 10 per cent of what is consumed by 20 million people in Lagos.
Besides, these countries import most of the petrol they consume.
That suggests that the quantity of petrol smuggled into their border towns from Nigeria is an infinitesimal fraction of their national consumption.
Niger Republic, Nigeria’s northern neighbor even has a refinery that exports diesel to Katsina State.
One therefore wonders how Nigeria’s petrol consumption would double because of the infinitesimal fraction smuggled into the four impoverished countries.
Fuel smuggling is a perennial problem in Nigeria.
As NNPC rightly argues, it is fueled by the huge profit margin emanating from Nigeria’s cheaper pump price.
There is no time in the year that petrol is not smuggled into the four neighboring countries.
The effect of the crime is often noticed in times of acute supply deficit like the one we have experienced since November 2017 when the exceedingly high landing cost of petrol forced major and independent marketers to stop importing 70 per cent of the national consumption figure.
NNPC’s argument is grossly at variance with the position of Ibe Kachikwu, the minister of state for petroleum.
Some weeks ago, as Nigeria was preparing to host the International Petroleum Summit in Abuja, Kachikwu blamed the embarrassing queues at fuel retail outlets in Abuja and neighboring states on logistic and policy problems.
Economy watchers interpreted Kachikwu’s “policy problems” as a veiled reference to the regulation of the downstream sector of the oil industry which allows government to fix the pump price of petrol artificially, thus restraining the invisible hand of demand and supply on the price mechanism.
Right now, many are constrained to think that NNPC and private marketers constitute a choice between the devil and the deep blue sea in terms of fleecing the country.
Even with crude oil at $100 per barrel and an economy growing at six per cent in 2011, Nigeria could not spend $5.8 billion on petrol imports in two months when private marketers imported 70 per cent of the product.
Unfortunately, NNPC has no feasible plan for halting refined petroleum imports.
The federal government in its statist starchiness has adamantly refused to sell the crippled refineries to allow private investors take control of the downstream sector of the oil industry and ensure a free flow of locally refined petroleum products.
With crude oil price hovering slightly above $60 per barrel, there are claims that the landing cost of petrol has dropped to N160 per litre.
The federal government should work out a policy of subsidizing fuel imports for private marketers from the foreign exchange end of the transaction just to break NNPC’s calamitous monopoly.
On its part, the National Assembly must investigate NNPC’s petrol import figures thoroughly to ascertain the source of the sudden upsurge in consumption.