*Marketers making extra 48% profit on smuggling, stakeholders allege
*Queues persist despite high price, CNG adoption
*Lagos, Ogun flash points as Dangote’s depot supplies average 9m litres

Marketers and smugglers in Nigeria may be finding the cross-border smuggling of Premium Motor Spirit (PMS) into neighbouring countries attractive despite the increase in the pump price of petrol, as daily truck out of the product soared by 20 million litres per day to hit over 68.2 million litres between August and October.

While the scarcity of PMS persisted in the country, with motorists still queuing in Abuja, Lagos and other states, despite the price increase, PMS consumption, which dropped to 41 million litres per day in August, moved to 43 million litres in September and now stands at about 50 million litres per day.

Petrol sells above N1,200 per litre in some states of the federation.

While the truck out for October 11 was 51.9 million litres with the addition of 209 trucks translating to 9.5 million litres from Dangote Refinery, the truck out for October 19 was 68.2 million litres with the addition of the 190 million tankers from Dangote depot with the volume of 8.8 million litres.

With prices of the product at N2,266 in Mali, N2,289 in Cote d’Ivoire, N2,196 in Cameroon and N1779 in Benin Republic, there are indications that smugglers are taking advantage of the country’s porous borders and weak Customs and immigration services to improve their profits.

Industry stakeholders told The Guardian that there was still a price differential on PMS in the country, stressing that profit margins in the country were low compared to the 48 per cent extra profit marketers make if they succeed with smuggling.

A truck out data of the Nigerian Midstream Downstream Petroleum Regulatory Authority (NMDPRA) obtained by The Guardian showed states like Lagos and Ogun, which bordered neighbouring countries by land and sea, are receiving more of the product.

Even with the adoption of Compressed Natural Gas (CNG), which should also lower consumption, NMDPRA’s report for October 19 shows that Nigeria’s petrol consumption remained at 50 million litres, despite the price increase.

The Chief Executive Officer of NMDPRA, Mr Farouk Ahmed, also confirmed the data while speaking on the sidelines of the 18th Africa Downstream Energy Week in Lagos.

Ahmed explained that an uptick in petrol consumption during the fourth quarter is typical, particularly during the holiday season, due to increased industrial and consumer activities.

In the report, Lagos received the highest volume of fuel deliveries on October 19 as a total of 289 trucks transported 12,575,624 litres of PMS to the state, cementing it as the leading destination for fuel distribution in the country. Ogun followed with 102 trucks delivering 4,719,472 litres, and the Federal Capital Territory (FCT) recorded 74 trucks supplying 3,394,020 litres.

Oyo State in the South West received 69 trucks, Osun 26 and Ondo 21.
For the South-South zone, Delta State received 69 trucks, Rivers 55 and Akwa Ibom 34.

In the North, Kano stood out with 55 trucks, followed by Kaduna 26, Katsina 27, Sokoto 16, Adamawa 26 and Plateau 17.

In the South East, Anambra got 42 trucks, Enugu 39, Abia 16 and Ebonyi got five.

Other depots made considerable contributions to fuel distribution.
Some marketers, especially the members of major marketers told The Guardian on the condition of anonymity that there is a possibility of exporting the product across borders through the Amuwo Odofin area of Lagos considering tanker turnaround to lift high volume across the country.

“They are possibly loading from depots and offloading into barges around Amuwo Odofin across the borders,” a source said.

Although the source suspected that the NMDPA could be calculating the truck out wrong, the volume of truck out has been consistently rising and the calculations are also from multiple locations with the final results aligning.

Energy economist, Henry Adigun, shed light on the continued profitability of fuel smuggling in Nigeria, citing the disparity between local and international fuel prices. He explained that the price gap created opportunities for smugglers and marketers to make significant profits.

“There is a differential price between what is sold locally and what the price is internationally. That is one of the reasons Dangote went to court,” Adigun stated.

He further noted that marketers involved in smuggling activities can earn as much as 48 per cent more in profits if they successfully move subsidised products across borders.

The PMS Truck-Out Report for October 11, 2024, NMDPRA showed that 1,117 trucks were dispatched, transporting 51 million litres of petroleum.

Among the major depots, Pinnacle-Lekki led with 127 trucks carrying six million litres, followed by 11 PLC with 88 trucks and 3 million litres. Ardova dispatched 69 trucks with 3 million litres, while Matrix sent out 61 trucks carrying 2.7 million litres. Other significant contributors include Masters with 45 trucks delivering 2.3 million litres, MRS LTD with 37 trucks carrying 1.9 million litres, and Aiteo, which dispatched 36 trucks with 1.8 million litres. Mainland depot followed closely with 41 trucks carrying 1,746,600 litres, while TSL and Bulk Strategic both sent out 36 and 35 trucks, transporting 1,620,000 litres and 1,578,000 litres, respectively.

Lagos received the highest volume at 6.6 million litres transported by 137 trucks. Anambra received 2,244,014 litres via 52 trucks, while 54 trucks delivered 2,547,007 litres to Ogun. Delta had 50 trucks supplying 2,171,000 litres, and the Federal Capital Territory (Abuja) received 1,984,984 litres from 41 trucks. Enugu was supplied with 1,809,000 litres by 36 trucks, and Rivers and Kano each received substantial volumes of 1,670,007 litres and 1,679,907 litres through 36 and 31 trucks, respectively. Edo was supplied with 1,557,997 litres from 35 trucks, while Oyo received 1,555,000 litres through 36 trucks.

About 209 trucks were loaded from the Dangote Refinery Depot and dispatched a total of 9.5 million litres.

Despite efforts by the government to curb illicit fuel trade, smuggling remains rampant, fuelled by higher international prices. The economist’s remarks underscore the need for stronger regulatory enforcement and reforms to reduce arbitrage and stabilise the local petroleum market.

In Abuja, long petrol queues persist across all retail outlets of the Nigerian National Petroleum Company Limited (NNPC) that were dispensing as a motorist, Dorcas Akele, said she spent about 30 minutes at the NNPC retail outlet in the Berger Area of the city before being able to fill her tank.

Some filling stations were locked across the city yesterday, while others sold at N1,098 and N1,200 per litre.

Energy scholar, Prof Wunmi Iledare, attributed the recent surge in petrol consumption to several economic and structural factors, including rising diesel prices, power supply challenges, and the inelastic nature of petrol demand.

According to him, economic theory suggests that when the price of a commodity rises, demand typically falls, noting however that this has not been the case for petrol in Nigeria.

“The key phrase here is other things being equal. But other factors, such as the increasing price of diesel and the collapsing national grid, are influencing the rise in petrol consumption,” he said.

The worsening state of Nigeria’s national electricity grid has further compounded the issue.

“The grid has collapsed multiple times over the past three months, pushing more people to rely on petrol generators to meet their energy needs,” Iledare noted.

The don pointed out that petrol, being a necessity in daily life, exhibits low price elasticity, as even when prices increase, demand remains relatively unaffected.

According to him, while cross-border smuggling may have declined due to rising prices within Nigeria, petrol demand has not dropped significantly because it remains essential.

The PMS Truck-Out Report for October 15, 2024, from NMDPRA data showed that a total of 1,386 trucks transported 62.6 million litres of PMS (petrol) across the country. Among the top depots, Conoil Lagos led the dispatches with 192 trucks delivering 9.8 million litres, followed by MRS LTD with 184 trucks carrying 8.5 million litres, and Pinnacle-Lekki with 94 trucks transporting 4.7 million litres. Aiteo and Bovas also contributed significantly, distributing 3.4 million litres and 3.3 million litres, respectively.

In terms of state distribution, Lagos received the highest volume, with 10.8 million litres delivered by 196 trucks. Ogun followed, receiving 4.3 million litres via 77 trucks, while Delta obtained 3,449,704 litres from 61 trucks. FCT (Abuja) was supplied with 3,082,997 litres through 55 trucks, and Rivers received 2,971,000 litres via 52 trucks. Other notable allocations include Anambra with 2,986,394 litres and Edo with 2,153,274 litres.

The Dangote Refinery Depot accounted for 188 trucks, transporting a total of 8.6 million litres.