The Independent Media and Policy Initiative has said presidential candidate of African Democratic Congress, Atiku Abubakar proposal to restore fuel subsidy would cost Nigeria at least N12 billion daily in revenue loss.
In a policy statement signed by its Chairman, Dr Omoniyi Akinsiju, the group said its research focused on losses from cross border smuggling under Atiku proposed production side crude discount model.
According to IMPI, deregulated daily consumption stands at 45 million litres per day, equivalent to 283,000 barrels per day, but under subsidised regime artificial demand surges to 60 to 65 million litres per day due to illicit arbitrage into Benin, Togo, Niger and Cameroon.
It estimated daily smuggled volume would reach 15 to 20 million litres, about 94,000 to 126,000 barrels per day.
The group assumed Atiku model aims to push pump price to N500 per litre when true landed cost is N1100 per litre, creating implicit subsidy of N600 per litre. At 20 million litres smuggled daily, daily fiscal loss equals N12 billion, or $8,571,428 at N1400 per dollar.
IMPI put annual loss at N4.38 trillion and $3.12 billion.
The think tank said N12 billion daily loss is not cheap fuel for Nigerians but revenue foregone from state equity crude sales diverted from Federation Account Allocation Committee pool to subsidise neighbouring economies.
It warned smugglers diverting subsidised products for higher margins in neighbouring markets would cause artificial shortages, stock outs and queues across border states.
It added that supplying extra 20 million litres daily to feed smuggling consumes extra 126,000 barrels of crude feedstock daily, nearly 15 percent of total state equity crude accrual spent on regional arbitrage rather than national development, while offering crude below global spot prices incentivises illicit trading and unrefined crude exports across land borders.
