Dr. Godswill Ihetu, a former Managing Director/Chief Executive Officer, Nigeria LNG Limited, has noted that the commercialisation of NNPC won’t resolve the problem of smuggling of petroleum products so long as subsidy remains.
Ihetu who spoke on Arise TV Morning Show on Wednesday, noted that the huge profit margin made by smugglers is a huge incentive driving the illicit business in the country.
According to him, smuggling thrives because the price of premium motor spirit is significantly higher in countries surrounding Nigeria, and will persist as long as their is fuel subsidy in the country.
“The point is petrol is significantly cheaper in Nigeria. We sell at N165 for example, let’s say that the price is Benin Republic or even Cameroon is an equivalent of N300. What it means is that 33000 litre tanker taken across the border can give you over N4 million profit.
“So, anyone who makes that kind margin from one transaction can afford to bribe anyone, and the person can do anything for such margin.”
Ihetu, however, noted that the commercialisation of the NNPC represents significant progress, one that is irreversible.
“The new NNPC Limited is a major step that is irreversible, because no government will ignore what is happening in other OPEC nations, such as Aramco in Saudi Arabia, PETRONAS of Malaysia, and Petrobras of Brazil,” he said.
“Future governments may tweak it but it is almost impossible to return to the old form. Everything may not be perfect now but with time. Those gray areas can addressed through amendments to improve on what we have now.
“The industry has serious challenges, such as the non performing refineries, crude theft, subsidy etc, and we need fresh approach to deal with these problems. It is not possible to stop smuggling because of the huge incentive created by subsidy given the price differential between Nigeria and it’s neighbours.”
Speaking further on the new NNPC, he said, “The shareholders’ structure has to be changed because states are likely to challenge the current structure, which does not involve them. As a commercial company, it can deal with the issue of refineries better without government interference, which may be the only way out of the present fuel crisis. The field has been opened for both NNPC and others to import and create competition in the market.”