Nigeria Loses N80bn Daily To Smuggling Of Petroleum Products


As of 2014, Nigeria’s petroleum industry, which is the largest in Africa, contributed about 14% to its economy. Though very important, the petroleum sector remains a fragment of the country’s economy that does not get the dedicated attention it deserves. Fourteen years ago, oil and gas exports accounted for more than 98% of export earnings and about 83% of federal government revenue, as well as generated more than 14% of its GDP. It also provided 95% of foreign exchange earnings, and about 65% of government budgetary revenues.

See Also: Oil Price Crashes To $33 As Fear About China’s Economy Grows

Obviously, there has been a drastic decline in the value of petroleum in Nigeria, even with the six petroleum exportation terminals in the country – two owned by Shell and one each by Mobil, Chevron, Texaco, and Agip respectively. Shell also owns the Forcados Terminal, which is capable of storing 13 million barrels (2,100,000 m3) of crude oil in conjunction with the nearby Bonny Terminal. Not to mention the ones owned by Mobil, Chevron and the other petroleum companies.

Oil smuggling

In an exclusive interview with Vanguard, the Chairman of the Nigeria Shipowners Association, NISA, Capt. Niyi Labinjo, said that the country is losing N80 billion daily to petroleum products smuggled into the country. He explained that half the 1.8 million litres daily national need of Premium Motor Spirit, PMS, is smuggled into the country. The NISA boss also noted that the Nigerian National Petroleum Corporation, NNPC, said the daily PMS need of the country is 1.8 million litres and that it (NNPC) only supplies half the quantity while the other half is smuggled into the country.

Labinjo pointed out that this is done through off-shore Lome and off-shore-Benin. Giving a breakdown of the loss, Labinjo pointed out that a 5,000 ton vessel laden with Automotive Gas Oil, AGO, costs N600 million. He said half of the 1.8 million litres comes to down to 900,000 and if divided by 5,000 equal 108 (5,000). Should this be multiplied by N600 million, it comes down to N108 billion and a large chunk of this amount is lost daily through smuggling of the product, he said.

Read Also: Kaduna Refinery To Restart Production

He advised that the smuggling of petroleum products through the off-shore Lome and off-shore-Benin must be stopped because of the effect on the nation’s economy. This is outside the revenue that should have been collected by the various government agencies like the NPA, NIMASA, NCS etc should these ships have berthed at the nation’s ports. He also said that the sector is more than capable of providing the N2 trillion needed to fund the budget.

According to the NISA Boss, the economic crime against the nation is being committed by foreign vessels that ship in these product informing their countries that they are headed for Nigeria, only for them to stop on the high seas where these products are discharged into smaller vessels and moved into Nigeria. He noted that 68 percent of these products get into the country unaccounted for and this costs the nation huge revenue losses in terms of capital flight, since the transaction is done in cash, (not captured in the economy), creation of employment for foreign countries, crew of each of the ships and negative effects of balance of trade.

He said that Nigeria presently has no control over about 200 vessels involved in this illegal trade outside the nation’s territorial waterways and that alone poses a security risk to the nation, especially with the security situation in the country presently. The retired Navy officer, stressed that government must as a matter of urgency stop the smuggling of petroleum products into the country, as well as ensure that the Cabotage Law is maximally enforced.

Check This Out: Fuel To be Moved From N87 to N97 As FG Removes Subsidy