Minister of State for Petroleum (Oil), Senator Heineken Lokpobiri has advocated against the current practice of the Nigerian National Petroleum Company (NNPC) Limited importing fuel but selling it below the landing cost.
Lokpobiri said as far as the practice continued, smugglers would continue to have a field day smuggling to neighbouring countries.
Specifically, Lokpobiri’s submission favours NNPC’s sale of imported fuel at a price above the landing cost to abridge the potential profit gap and disincentivize smuggling of the product to neighbouring countries for high profit making by those involved in the shady business.
The minister spoke at the 2024 Energy and Labour summit in Abuja, where he also pointed the finger at security agencies for their complicity in aid of smuggling activities.
According to him: “If NNPC imports PMS and sells to marketers at perhaps N600 or below, there’s no way that smuggling can stop.
“When smugglers are taking the products outside the country, even if you put all the policemen on the road, they are Nigerians; you and I know the answer (response).”
Lokpobiri said that fuel smuggling from Nigeria to neighboring countries was an issue that could not be entirely eradicated.
He took the opportunity of the summit to explain that the NNPC Limited lacks the funds necessary to rebuild the nation’s aging pipelines, which contribute to economic sabotage through pipeline vandalism and crude oil theft, which had been a drain on oil revenue.
He explained that “the old, corroded pipelines, some of which date back to the 1960s and 1970s, are easily vandalized,” thus facilitating the illegal transport of fuel.
According to him: “The reason why pipeline vandalism is very easy to do is because the pipelines have all expired; they are completely corroded. So, anybody can just go and tap it, and the thing is busted.”
The minister stated that even with increased crude oil production, “the challenge lies in transporting it to terminals due to the deteriorated state of the pipelines.”
Lokpobiri called for a public-private partnership to address the infrastructure issues, saying, “That is why we have to go for the global model – PPP. We have to get the private sector to come in.”
He said there was the need for Nigeria to play a strategic role in ensuring energy security across West Africa, stressing that “Nigeria plays a very critical role in the energy security in Africa.”
Lokpobiri expressed concerns about supply of crude oil to local refineries, including the Dangote Refinery, noting that without increased production, meeting domestic and export obligations would be challenging.
His words: “Our ambition is to ramp up production. It is only when we ramp up production that the midstream and the downstream can also be successful.
“Supporting local refining is the way to go. We can look for investors to explore and bring out this crude, so that we will be able to meet both our domestic obligations and also export some to be able to raise more dollars and meet our obligations.”
He underscored the importance of ramping up production to support local refining and ensure healthy competition among refineries, assuring Nigerians that “We are committed to ensuring we support local refineries with all the feed-stock.”
