Fuel subsidy removal in Nigeria: Shortage of smuggled petrol called “Kpayo” in Benin
0By Ablawa BOKO in Cotonou and Ayodele SAMUEL in Lagos
The price of gasoline adulterated commonly called “kpayo” tripled in Republic of Benin following price increase in neighboring Nigeria. The kpayo (the fuel sold in informal sector brought from Nigeria to Benin) sold usually between 250 and 300 francs (Cfa) per liter, increased to 400 francs on Saturday. Since then, the price of gasoline has climbed. Currently, it is sold at 700 francs per liter. “At the wholesale level, the container purchased 8000 CFA before, is sold today to retailers at 14,000 CFA francs”, said Razack, a fuel dealer in Cotonou.
Within days, the price of kpayo has soared across Benin. This is having a negative effect on people whose main source of fuel is the informal sector.
The shortage is related to the recent increase in PMS in border country Nigeria.
“Every increase in pump price in Nigeria affects , the distribution of kpayo knows some disruption.” said Ernest, a fuel seller at Gbégamey (Cotonou). Raphael, a client, is surprised that this has lasted as long. “Usually, this crisis comes at the holiday season, and just after, the trend is the opposite,” he said. Except that this year, the crisis seems very deep and there are many reasons to worry.
The Nigerian government announcement last Sunday has resulted in increase prices at the pump locally. Nigeria is the first oil producer in West Africa and the only supplier of fuel to the biggest sector of fuel selling in Benin, the informal sector.
Some sellers of kpayo have decided to store their tables and bottles and engage in other business activities. Some students who cannot afford the hiked price are forced to park their bike at home.
In the ranks of motorcycle taxi drivers called “Zémidjan”, prices are soaring upwards. For a distance that usually costs 100 CFA francs now costs more and sometimes twice. The price of travel from one place to another have also increased. Taxi drivers in the international destination of Burkina Faso, Cote d’Ivoire and Togo have also revised their tariff. Some have parked their cars and waiting for the return of the situation to normal. Traffic is more fluid.
Clients reconnect with products Sonacop
At 800 Francs per liter, the kpayo is very expensive, more expensive than the pump. Thus the sellers of adulterated gasoline stormed the stations where they refueled to resell. The fuel stations were not prepared for such a crowd. According to Ernest, the kpayo was firmly rooted in the habits in Benin. It’s like a reflex, people do not ask too many questions. For this purpose they are hopeful that the crisis will be resolved very quickly. Otherwise, the purchasing power of the Benin risks becoming weak. ”
With a few differences, prices at the stations of Sonacop (national society of marketing of petroleum products) are currently below those charged by sellers of kpayo.
In Sonacop stations, gasoline is sold at 570 FCFA. The rush to these places is improving daily sales.
Large quantity of Nigeria’s PMS are daily smuggled into the Republic of Benin through its Badagry/ Seme porous border when the Nigeria government subsidies the product for its citizen.
In spite of the removal of petrol subsidy by the Federal Government, smuggling of the product into neighboring BeninRepublic persists because of price differential.
The border towns of Owode and Kpogidi in the Seme-Badagry area of Lagos state, showed that though the removal of the subsidy has increased the price per litre in Nigeria to about N140, the same litre was N250, officially, in Benin Republic.
Though the black market price of a litre of smuggled Nigeria petrol in Benin Republic has been increased to N200, it was still cheaper than buying from filling stations there at N250.
Until the January 1 deregulation, which raised the pump price of petrol from N65 to about N140, smuggled Nigeria petrol was sold at N100 per litre in Benin Republic, while it was N200 a litre at the filling stations in the Francophone country.
Residents of Kpogidi (a border town )hardly patronised the filling stations that sell at the official pump price of N250 per litre.
The Central Bank of Nigeria (CBN) Governor, Sanusi Lamido once noted that most of the products claimed to have been imported found their way to neighbouring countries through unscrupulous marketers.
For further information on this report contact, Ayodele Samuel in Lagos, Nigeria on gtms06@yahoo.com
