RECENT hikes in premium motor spirit (PMS) prices in Nigeria have translated into significant increases in the price of smuggled gasoline in Benin by about 60 per cent, exerting pressure on the country’s inflation, the International Monetary Fund (IMF) disclosed in a report.
The report contains the findings of the IMF officials who visited the country from September 6 to 12 to assess recent economic developments and gauge progress in commitments under Benin’s Fund-supported programme.
PMS pump price had an equivalent of N381 in Benin compared to Nigeria’s N189 before the fuel subsidy removal, according to KPMG in its ‘Removing Fuel Subsidies in Nigeria’ report, released in June.
“Indeed, in response to the PMS subsidy removal by President Bola Tinubu, pump prices in the Republic of Benin almost doubled from 450 CFA to 800 CFA, underscoring the widespread belief that significant quantities of subsidised PMS were smuggled out of Nigeria into neighbouring countries,” it added.
A check by The ICIR shows 800 CFA to naira approximates N969.
The porous Nigerian borders, spanning over 17,000 kilometres, allow petroleum products to be smuggled into Benin and other neighbouring countries.
A Daily Trust report showed that black marketers always have a field day along the various unmarked routes where smugglers operate across towns in Adamawa, Katsina, Oyo, Ogun, and others.
According to the report, smugglers deploy various strategies to fleece Nigeria of its scarce petrol while flooding neighbouring countries with the product for a huge profit.
TheCable on June 4 reported that petroleum product from Nigeria was regularly smuggled into neighbouring countries, including Cameroon, Ghana, Benin Republic and Sudan.
The federal government of Nigeria’s e-border surveillance project has remained incomplete four years after the last Federal Executive Council (FEC) approved N52 billion to purchase e-border surveillance systems for the country, The ICIR reported.
According to the IMF team, its Executive Board had on July 8, 2022, approved “a blended arrangement under the Extended Fund Facility (EFF) and Extended Credit Facility (ECF) for Benin for US$638 million, the equivalent of 391 per cent of quota to help meet pressing financing needs and support the country’s progress towards the Sustainable Development Goals.”
The country’s gross domestic product was 6.3 per cent in the first half of the year; however, the Beninese economy faced headwinds from Niger border closure amidst regional sanctions after the recent coup and higher gasoline prices following pump price hikes in Nigeria.
Budget support to Benin from development partners is expected to be larger than planned, which could unlock the room for additional spending in these challenging times.
“The authorities are preparing a draft 2024 budget in line with their broad objective of converging to the West African Economic and Monetary Union (WAEMU) deficit norm of 3 per cent of GDP by 2025.
“They are also developing a medium-term revenue mobilisation strategy to support fiscal consolidation while meeting Benin’s large development needs,” IMF said.