The Nigerian National Petroleum Company Limited (NNPCL) Group Chief Executive Officer, Mele Kyari, has revealed that petrol smugglers were making a whopping ₦17 million per truck of petrol smuggled across Nigerian borders under the previous fuel subsidy regime. He made this statement during a press briefing in Abuja, explaining how fuel subsidy created an environment that encouraged massive smuggling, which drained Nigeria’s economy.
Kyari explained that due to the price differences between Nigeria and its neighboring countries, smugglers were reaping huge profits by taking advantage of the artificially low petrol prices in Nigeria. According to him, each truck carrying 6,000 liters of petrol could generate ₦17 million for smugglers when sold across the borders, a practice that continued for decades until the subsidy was removed by the administration of President Bola Ahmed Tinubu in June 2024.
“In the last 47 years, petrol has always been subsidized, and this subsidy created arbitrage,” Kyari said, referring to the significant price differences that incentivized smuggling. “When Mr. President announced the removal of the subsidy, it recalibrated the price, making it unprofitable for anyone to continue cross-border smuggling of fuel.”
Kyari gave insight into how smugglers made significant profits from the arbitrage system. “For a 6,000-liter truck of petrol, smugglers could easily make ₦17 million. Imagine someone making that amount with just one truckload. With two trips, a smuggler could make double that amount, which is the price of the truck itself,” he explained.
He also highlighted that the huge difference between legitimate sales within Nigeria and the profits from smuggling created a difficult situation for authorities trying to curb the illegal practice. “If I can make ₦17 million by taking a truck across the border, why would I choose to sell in Maiduguri for only ₦500,000? It’s simple economics,” Kyari remarked.
This admission by Kyari paints a clear picture of how damaging the fuel subsidy regime was, not just to Nigeria’s economy, but to the country’s ability to control its resources. For many years, the government tried to fight fuel smuggling, but the profits involved made it nearly impossible to put an end to the practice.
Following the removal of the fuel subsidy, Nigerians have been hit with a series of fuel price hikes. Most recently, on October 9, 2024, petrol prices jumped significantly at fuel stations across the country. This price surge came as another shock to Nigerians who are already enduring one of the worst economic crises in decades.
The price at the pump rose from ₦855 to ₦998 per liter in some areas, while in other places, such as Abuja and Kano, prices exceeded ₦1,000 per liter. This hike marks the second increase in fuel prices in just over a month, further deepening the economic hardship faced by millions of Nigerians.
The Nigerian government, however, has not officially commented on the latest fuel price hike. Analysts believe the price surge is a consequence of the NNPCL’s massive debt to fuel suppliers, which was acknowledged in September 2024 when the company raised fuel prices by about 40 percent to balance its finances.
The rise in fuel prices is just one part of the broader economic crisis affecting Nigerians. Since President Tinubu came into office in 2023, his government has pursued economic reforms designed to stabilize the economy, attract foreign investment, and reduce the country’s debt burden. One of his most significant moves was ending the long-standing fuel subsidy, which many had argued was draining Nigeria’s resources.
Before the reforms, petrol was sold for less than ₦200 per liter in Nigeria. The removal of the subsidy, coupled with the devaluation of the naira, has seen prices skyrocket. Inflation is now at a three-decade high, with the cost of food, transportation, and essential goods rising dramatically. The naira has also plummeted against foreign currencies, making it even harder for ordinary Nigerians to cope with the skyrocketing prices of imported goods.
For many Nigerians, the sudden fuel price hike on October 9 has only made matters worse. With inflation eating into their wages and savings, many are finding it increasingly difficult to make ends meet.
