The Managing Director and Chief Executive Officer of Financial Derivatives Company Limited, Mr Bismarck Rewane, had revealed that following the cessation of the border, petrol now sells for N144 per litre, pointing that the closure had obstructed smuggling of petrol to the neighbouring countries.
Rewane stated the development showed that part of the nearly 60 million litres of petrol said to be consumed daily in Nigeria were smuggled to the neighbouring countries.
He also revealed that diesel price has also crashed to N210 per litre.
Rewane disclosed this in a report he presented at the monthly Lagos Business School’s executive breakfast meeting for September, obtained at the weekend.
Confirming the drz̄op in petrol smuggling, the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Malam Mele Kyari, yesterday disclosed that the volume of petrol evacuated from depots to filling stations across the country has dropped significantly.
Mele Kyari suggested that the drop in petrol evacuation from the depots may have been influenced by Nigeria’s closure of its borders with the Benin Republic in August.
President Muhammadu Buhari, reportedly said he would hold a meeting with Benin and Niger, who are the country’s northern neighbours, to determine measures to check to smuggle across the borders, and that the closure was limited to allow security forces stem the trend of rice smuggling.
But in his tweet, Mele Kyari said: “Significant drop in PMS (premium motor spirit) evacuation from fuel depots noted since August 22nd. May be connected to border closure and other interventions of the security agencies aimed at curbing smuggling. We will contain smuggling of PMS.”
A recent report from the NNPC indicated that between June 2018 and June 2019, the corporation imported 20,898,453,347.24 litres of petrol for consumption, out of which an average of 44,366,781.77 litres was consumed daily in June 2018; 39,154,764.15 litres in July; 54,144,365.76 litres daily in August of same year, and 55,499,192.80 litres daily in September 2018.
The corporation also said that between October and December 2018, the country’s daily petrol consumption level was 56,516,386.60 litres; 53,996,261.10 litres; and 58,172,467.58 litres respectively.
The daily consumption figures rose to 65,938,603.99 litres in January 2019; but dropped to 56,855,696.76 litres in February of the same year, before heading down to 30,988,903.59 litres in March 2019. In April of the same year, it rose again to 63,334,876.75 litres and further to 67,606,434.87 litres in May before climbing down to 53,093,286.55 litres in June.
Similarly, a 2018 report of the World Bank stated that Nigeria spent N731 billion to subsidise petrol consumption which figures were inflated.
The June 2019 operations report of the corporation indicated that over a period of one year, the NNPC incurred a total of N718.774 billion on under-recovery – a term it uses to describe the cost of subsidising petrol consumption in the country.
On his part, Rewane said the border closure has blocked export smuggled refined products
This, according to him, “makes it transparently evident that Nigeria does not use 60 million litres of PMS (premium motor spirit or petrol) daily.”
However, Rewane report showed that the prices of turkey have since gone up by 38.46 per cent to N1800 per kg and rice up 12.5 per cent to N18,000 (50kg)
“Partly due to a shallow market and indirect interventions by policymakers Buhari orders partial border closure to control smuggling,” he added.
In his assessment of the recently released second-quarter Gross Domestic Product (GDP) figures, he stressed that 1.94 per cent GDP makes the attainment of the annual projection of 2.2 per cent GDP target a tall order.
The report showed that the money supply expanded as the CBN open market operations (OMO) activities intensified.
“Banks are saving their cash to meet the loan-to-deposit ratio of 60 per cent. The average opening position of the banking system was N88.72 billion. Interbank interest rates swung between 2.5 per cent per annum to 30.29 per cent per annum,” the report added.
It also revealed that the CBN last month reduced forex sold by 35.04 per cent, to $787.96 million. Forex traded higher on the investors’ and exporters’ window by 57.04 per cent to $6.80 billion, which is attributed to the push by foreign portfolio investors that, “rushed out the door as fears of forex restrictions send jitters down their spines.”
In the parallel market, the naira was flat at N360/$.
It revealed wide variation between states with low (7.93 per cent) and high (15.41 per cent) inflation, adding that states with high inflation were mainly prone to internal violence.
“Recession is cyclical. Nigeria used to be insulated from global developments. Now, the country is more integrated with the global markets – foreign portfolio investors, foreign direct investments and trade flows, making it more vulnerable to downturns,” it stated.