• Oil & Gas - News
  • Updated: January 28, 2023

Cross-Border Smuggling Preventing Fuel Distribution, Says FG

Cross-Border Smuggling Preventing Fuel Distribution, Says FG

The Federal Government asserts that cross-border smugglers' actions, which divert petroleum products to be sold at a profit in neighbouring countries, have exacerbated the present Premium Motor Spirit (PMS) distribution problem.

This information was provided by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) in a report it published on Friday regarding the nationwide supply and distribution of PMS.

It said that the traffickers were directing PMS intended for the Nigerian market to nearby nations where the prices are much higher than the set regulations.

The authority said it was engaging and collaborating with the Nigeria Customs Service to address the issue.

It was noted that due to inflation and the geographical effects of the Russia-Ukraine crisis on the global energy value chain, the price arbitrage between Nigeria and its neighbours had continued to increase.

The authority also stated that coastal vessel charter costs and international freight rates were factors in the development.

It added that tanker tankers transporting petroleum products had to be rerouted to different highways as a result of the government's continuous effort to repair crucial Nigerian roads ahead of the rainy season.

This, it claimed, has increased product transit time and related transportation costs.

“The NMDPRA and key stakeholders including NNPC Ltd. have put various measures in place to address the issues.

“The measures include modest adjustment in the cost of product transportation to cater for the impact of high price of Automotive Gas Oil (AGO), known as Diesel on transporters, while making special provision of diesel to marketers at a reduced price,” it said.

Other items on the list included automating the product sales interface and installing a surveillance system in coordination with government security agencies for the delivery of goods to retail establishments.

The efforts also included longer operating hours at the loading depots and a few chosen filing stations, the NNPC's regular stakeholder interactions, and the renovation of the vital fuel distribution road network through the Federal Government's tax credit programme.

It claimed that it has strengthened its monitoring teams and put in place the necessary sanctions to put a stop to the actions of bad marketers who were sabotaging the intended product flow to certain outlets in order to profit from price arbitrage.

“As a medium to long term measure, cost-efficient means of transportation, including Autogas conversions and pipeline rehabilitation, are being implemented.

“This will be complemented by end-to-end process automation across the value chain.

“The authority wishes to reassure all Nigerians that there is PMS sufficiency of over 1.6 billion litres as of Jan. 26, 2023, both on land and marine,” it said.

The authority said the NNPC Ltd had additionally made firm commitment to supply more volume of PMS for the months ahead to guarantee national energy security and nationwide availability at the government regulated price.

“NMDPRA appreciates the collaborative efforts of some patriotic oil marketing companies who, despite the glaring incentives to engage in illegal price arbitrage, have stood steadfast and operated responsibly within the approved pricing limits.

“We reassure all Nigerians that NMDPRA would continue to work passionately to ensure energy security and continuous collaboration with relevant stakeholders to restore normalcy in the PMS supply and distribution network within the shortest possible time,” it said.

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