Crude theft: FG loses $4.5bn petrol subsidy payment to smugglers — W/Bank

By Uthman Salami

The World Bank has disclosed that Nigeria is losing overv$4.5 billion Naira as payment for subsidy to those who engage in smuggling the product the product.

The World Health Organization (WHO) revealed this in November 2021 edition of its Nigeria Development Update tagged “Time for Business Unusual” on Monday, November 29 was indicative of 2 per cent of GDP or 35 per cent of oil and gas revenue.

It said that the subsidy overwhelmingly accrues to wealthier households, and a large share is captured by smugglers and black marketeers.

Households in the bottom 40 per cent of the income distribution account for less than 3 per cent of all gasoline purchases, noted the report.

According to World Bank, Nigeria’s PMS subsidy imposes a massive and unsustainable fiscal burden as the cost of the PMS subsidy in 2020 rose from just 4 per cent of the oil and gas revenues that are first transferred to the Nigerian National Petroleum Corporation, NNPC (US$0.3 billion) to a staggering 35 per cent in 2021 (US$4.5 billion or roughly 2 percent of GDP).

Despite the decline in production, oil and gas revenues collected by the NNPC in the first nine months of 2021 alone are estimated to broadly match those collected in the entire year in 2020; because global oil prices rose by more than 50 percent between the two periods.

Rebounding oil prices also increased the cost of the PMS subsidy by raising the price of imported PMS; from less than US$200 per ton in April 2020 to US$840 per ton by November 2021; causing net oil and gas revenues transferred to the Federation Account by the NNPC to plunge from N1.1 trillion to N0.5 trillion.