June 07, (THEWILL) – The sudden increase in the price of petrol in Benin, Togo and other countries within the Nigerian borders, following the removal of subsidy by the Federal Government is a confirmation that these countries have been benefiting from smuggling of petroleum products, a report by KPMG, a global accounting services company has revealed.
KPMG Nigeria revealed in the report that the removal of fuel subsidy by the Nigerian government has led to the price of petrol rising in Benin Republic.
This suggests that the price Nigerians pay for the fraudulent subsidy is the benefit the neighbouring countries enjoy.
According to the financial consulting firm in the report “Removing Fuel Subsidies in Nigeria,” the cost of fuel rose to 800 CFA, almost double the previous price of 450 CFA.
The firm said the increase indicates that fuel in Nigeria is smuggled to neighbouring countries due to the inability of Nigeria to track PMS subsidy consumed by Nigerian consumers.
Nigeria spends around N400 billion monthly and around N4.8 trillion yearly, a gesture which has been described as unstainable.
President Tinubu during his inauguration on May 29 announced that the Federal Government will no longer pay subsidies on Premium Motor Spirit.
Consequently, the NNPC Ltd adjusted the prices upward from between N189 to N194 to N537 per litre in Abuja and other North-Central States such as Nasarawa, Plateau, Kwara, Kogi, Benue and Niger.
In Lagos and other South West States such as Oyo, Ogun, Ekiti, Ondo and Osun, the price of PMS was raised from between N184 and N189 per litre to between N488 and N500 per litre.
In the South-East with states: Abia, Imo, Anambra, Enugu and Ebonyi, the price was increased from between N184 and N189 per litre to N515 to N520.
Similarly, KPMG confirmed that the Benin Republic has been impacted by the decision to remove the subsidy.
“A key challenge throughout the implementation of the PMS subsidy regime was tracking precisely how much-subsidized fuel was consumed by Nigerian consumers and how much leaked into the markets of neighboring countries that did not have such subsidies.
“Indeed, in response to the PMS subsidy removal by President Bola Tinubu, GCFR, pump prices in the Republic of Benin almost doubled from 450 CFA to 800 CFA, underscoring the widespread belief that significant quantities of subsidized PMS were smuggled out of Nigeria into neighboring countries,” KPMG wrote in the report.
It added, “It is well known fact that due to the subsidy, the price of petrol in Nigeria is lower than in neighbouring countries, which creates an arbitrage opportunity for traders to buy petrol in Nigeria and sell it in those countries at a higher price.
“This results in the diversion of subsidized petrol to neighbouring countries, where it is sold at market prices, while Nigerians face fuel scarcity and long queues at petrol stations. Compared to the estimated PMS pump price of NGN 189 per litre in Nigeria, PMS prices are N333, N365, N381 and N399 in Chad, Niger, Benin and Cameroon respectively.
“Indeed, in response to the PMS subsidy removal by President Bola Tinubu, GCFR, pump prices in the Republic of Benin almost doubled from 450 CFA to 800 CFA, underscoring the widespread belief that significant quantities of subsidised PMS were smuggled out of Nigeria into neighbouring countries.
(Source: thewillnews.com)
