Smuggling still drives up petrol prices in Nigeria -Dangote

The President of Dangote Industries Limited, Aliko Dangote, explained that the smuggling of petrol from Nigeria to neighboring countries is one of the reasons why product prices continue to rise in Nigeria.

According to him, smugglers take these products abroad because they are sold at higher prices in neighboring countries.

Dangote stated this on Tuesday during an interview on Arise TV on Tuesday while talking about petrol prices and product availability amidst the ongoing crisis in the Middle East.

Dangote said petrol prices in neighboring countries were between 30 and 50 percent higher than in Nigeria, arguing that the price differential created a strong financial incentive for traders to move petrol abroad.

Explaining why Nigerians may find petrol expensive even though the country produces the commodity domestically, Dangote said the price cannot be considered in isolation from prices in neighboring countries.

“Well, expensive is relative. In the sense that now there are probably a lot of them, there are some who are ignorant too. What they need to ask is, how much does the neighbor cost?”

He said the continued movement of Nigerian petrol across borders was partly due to the significant difference between domestic prices and prices obtained in neighboring countries.

“I don’t know if you know that there is still a lot of smuggling of the same fuel that we produce to neighboring countries.”

Fuel smuggling is one of the reasons the government has stopped paying fuel subsidies. There is an argument that although the government subsidizes the product to make it cheaper for Nigerians, smugglers have the opportunity to take it abroad to sell at a higher price.

This price gap means that petrol purchased in Nigeria could potentially be resold across the border at a higher price. Dangote said this creates incentives for smugglers to divert petrol meant for the Nigerian market rather than selling it domestically.

“Because neighboring countries are 30 to 50 percent more expensive than Nigeria. So, it’s not really like that.”

Dangote specifically cited Niger, where he said petrol was sold at a premium of between 20 and 25 percent compared to Nigeria.

“And people can now ask, OK, OK, how much does it cost, even now it’s N1,350? OK, the price in Niger is 20 to 25 percent more expensive than in Nigeria,” he said.

He questioned what other legitimate business could provide such quick profits.

“So, what business will you do that can make you an instant profit of 25 percent?” he asked.

Dangote further explained how petrol destined for domestic distribution can allegedly be diverted across borders to be sold to buyers in neighboring countries.

“So what I mean is, just take it [petrol]go and take it across the border. You pretend to take it to Sokoto, you go and take it to Ilela, then you sell it.

“Actually, they don’t have any.”

The implication, according to Dangote, is that products that should remain available to Nigerian consumers may be moved abroad due to the higher prices that can be obtained in the country.

However, beyond the price issue, Dangote said the current crisis in the Middle East could pose different challenges to Nigeria’s downstream markets.

He warned that the main concern could shift from high fuel prices to whether sufficient quantities would be available to consumers.

“And the problem now, going forward, I also have to warn is that this crisis in the Middle East is no longer about price; it’s about availability,” said Dangote.

When asked whether Nigerians should be worried about petrol supplies, Dangote said the Dangote refinery was ready to continue meeting domestic demand.

“We will send to Nigeria. Nigerians don’t need to worry. There will be no shortage on our side.

“There will be no shortages. There will be no queues. We will ensure that we continue to satisfy the market, despite the odds,” Dangote added.