By Kolawole Ojebisi
The Group Chief Executive Officer of the Nigerian National Petroleum Company Limited, Mr Mele Kyari, has disclosed that the removal of fuel subsidy has more far-reaching effects than most Nigerians realise.
Kyari said putting an end to fuel subsidies in Nigeria has significantly reduced cross-border smuggling of Premium Motor Spirit.
Kyari stated this in an interview with Channels TV on Sunday, stressing that the positive outcome by the policy far outweigh the bad if there is actually any.
He explained further that the subsidy created a price disparity between Nigeria and neighbouring countries, making smuggling highly profitable.
Kyari added that this wide disparity in price was responsible for the influx of smugglers into the country.
Prior to the subsidy removal, Kyrari stressed that the price differentials were substantial, incentivising smugglers to transport fuel across borders.
However, “the removal of the subsidy has effectively calibrated fuel prices, eliminating the profitability of smuggling”, he said.
Kyari noted that the cost disparity between legitimate and illegal transportation of PMS is now significant, with legal transportation being much less profitable.
In addition to reducing smuggling, the subsidy removal has also brought about price parity and equalisation with the cross-border prices of PMS, he added.
Kyari said: “The removal of fuel subsidy in Nigeria has been a game-changer in the fight against cross-border smuggling.
“For decades, the subsidy created a lucrative opportunity for smugglers to profit from the price difference between Nigeria and neighbouring countries.
“This is a positive development for Nigeria’s energy sector, as it can help to ensure that consumers are paying fair prices for fuel.”
Recall that President Bola Tinubu had announced the removal of fuel subsidy in his inaugural speech on May 29, 2023 after taking the reins of power from his predecessor, Muhammadu Buhari.
This is despite the fact that there are insinuations that it was the Buhari administration that actually removed the subsidy while leaving the task of announcing it to its successor.
The economy has been badly hit by the removal of fuel subsidy and this has had knock-on effects on every other sectors.
