Kukutenla:

News has it that price of fuel has gone up in neighboring countries to about 900naira.
So except we're looking to increase ours as well to match theirs, that removal will not stop the acclaimed smuggling.

It makes no sense to buy from Nigeria again when importers in those countries can easily import and sell at N900. Except we still have an element of subsidy in our pricing, the smuggling will end sooner than later as it will make more sense to import and sell directly.

However, there is nothing wrong if some people still take our fuel to sell in neighboring countries. They buy at the market price of N530 and export through approved routes to these countries. It increases our trade balance and export. No big deal.

seunmsg:


It makes no sense to buy from Nigeria again when importers in those countries can easily import and sell at N900. Except we still have an element of subsidy in our pricing, the smuggling will end sooner than later as it will make more sense to import and sell directly.

However, there is nothing wrong if some people still take our fuel to sell in neighboring countries. They buy at the market price of N530 and export through approved routes to these countries. It increases our trade balance and export. No big deal.

Why will a smuggler export through approved route where he'll have to pay taxes? What happened to the previous smuggling routes?
A smuggler can buy at 530 in Nigeria and sell at 730 in Benin making a 200 profit while he sells easily because it's still cheaper than the 900naira.
So no net difference for the smuggler. In fact, business is booming more and more. The only people who benefit from the smugglers' activities are the marketers who get to import more fuel than we actually need, further impacting our balance of trade negatively and weakening our naira.
The idea that increasing fuel price will stop smuggling does not look smart after all. I've always believed so.

Kukutenla:

Why will a smuggler export through approved route where he'll have to pay taxes? What happened to the previous smuggling routes?
A smuggler can buy at 530 in Nigeria and sell at 730 in Benin making a 200 profit while he sells easily because it's still cheaper than the 900naira.
So no net difference for the smuggler. In fact, business is booming more and more. The only people who benefit from the smugglers' activities are the marketers who get to import more fuel than we actually need, further impacting our balance of trade negatively and weakening our naira.
The idea that increasing fuel price will stop smuggling does not look smart after all. I've always believed so.

If an importer in Nigeria can import fuel and sell at a good profit making price of N530, why will an importer in Benin Republic not import directly and sell at N730 and make super profit?

If the price is N730 in Benin, it is by far my profitable to import directly and sell in Benin than import to Nigeria and smuggle to Benin. Even if for any reason smugglers prefer to buy in Nigeria and smuggle to Benin, it is still profitable to Nigeria as importing through Nigeria attracts customs duties before smuggling the product out. In as much as there is no subsidy, Nigeria is not losing anything. It is a plus for our trade balance.

seunmsg:


If an importer in Nigeria can import fuel and sell at a good profit making price of N530, why will an importer in Benin Republic not import directly and sell at N730 and make super profit?

If the price is N730 in Benin, it is by far my profitable to import directly and sell in Benin than import to Nigeria and smuggle to Benin. Even if for any reason smugglers prefer to buy in Nigeria and smuggle to Benin, it is still profitable to Nigeria as importing through Nigeria attracts customs duties before smuggling the product out. In as much as there is no subsidy, Nigeria is not losing anything. It is a plus for our trade balance.

You reason as if smugglers are importers or marketers. If you believe those who smuggle fuel are importers or marketers, then you are totally mistaken. Go to our borders. They use volkswagen golf cars which they build special tanks inside to move fuel. That's why I've always been of the firm belief that the volume being smuggled is minute compared to our total consumption. Benin Republic has less than a million registered vehicles while Nigeria has over 15million. Most transport in Benin Republic is motorcycles and the motorcycles in Nigeria quadruple the number in those countries.
But that's by the way. The smuggler is not going to pay any custom duties when leaving your border with the fuel. Instead, he'll increase your demand for dollars since you'll need more fuel to meet the genuine and smuggled demands. That means we are importing more fuel and in paper not exporting at all because the export is actually smuggled. So i wonder how you arrive at that being good for our balance of trade. There's a reason why every country has customs and border protection. It's because smuggling is economic sabotage. It leaves a hole in your balance of trade.
From the info that made the news, the price in Benin is 900naira now not 730. So the importer who imported legally into Benin Republic can't sell at 730. That's your imagination which is not in tandem with reality. I only used 730 to show you how wide the margin has become again and hence, smuggling is attractive again. Our forex will not improve as a result because we are using our dollars to finance fuel without getting anything back in return.