Petrol prices in several West African countries have experienced a significant increase following Nigeria’s decision to remove subsidies on petrol. Markets surveyed have witnessed a surge of over 40 percent in petrol prices, impacting neighbouring countries such as Cameroon, Togo, Benin, and Guinea, among others. Global petrol prices, a reputable energy price data and fuel price forecasts think-tank revealed the consequences of Nigeria’s subsidy removal on the region.
The disparity in petrol prices between Nigeria and Guinea is less than N268, with some other West African countries experiencing a difference of around N443 per litre. This indicates that the removal of subsidies by Nigeria has disrupted the illicit petrol trade in the sub-region. Experts have pointed out that the recent price hikes in border countries like Benin Republic, Chad, and Niger highlight the fact that Nigeria has been subsidizing petrol prices in these countries for years. Kelvin Emmanuel, an energy sector expert and co-founder/CEO at Dairy Hills, emphasized the repercussions of this sudden change.
The analysis further demonstrates that the removal of petrol subsidies has made smuggling petrol from Nigeria less profitable. The black market prices are now converging with the retail prices at official stations. A viral video circulating on various social media platforms captured motorcycle riders in Cameroon expressing their discontent with the decision made by President Bola Tinubu.
Billy Gills-Harry, the president of the Petroleum Retail Outlet Owners Association of Nigeria, acknowledged the impact of Nigeria’s subsidy removal on petrol prices in West Africa. Gills-Harry explained that neighbouring countries are experiencing price fluctuations due to supply disruptions and high demand. He also highlighted the effect of subsidy removal on the purchasing power of countries involved in petrol smuggling from Nigeria.
The exact volume of petrol being smuggled out of Nigeria remains undocumented. Nigeria’s state-controlled oil company, NNPC, recently announced that 66 million litres of petrol leave its depots daily but was unable to estimate the domestic consumption. However, the company admitted that smuggling activities were widespread. Independent energy experts estimate that Nigeria’s daily energy usage is less than 40 million litres. To address the ongoing petrol shortages, Nigeria’s Dangote Petroleum Refinery plans to commence petrol production in early August, which is expected to alleviate the situation.
Vice President Kashim Shettima stated last week that Nigeria’s daily petrol consumption has decreased from 67 million litres to 41 million litres following the removal of subsidies by President Bola Tinubu. Shettima highlighted the opaqueness and inconsistencies within the subsidy regime.
The recent removal of petrol subsidies in Nigeria has caused a significant ripple effect across West Africa, leading to surging petrol prices in neighbouring countries. As the region adapts to these changes, stakeholders will need to closely monitor the impacts on the economy, trade, and the welfare of citizens.