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A military coup in Niger has led to the overthrow of the democratic government and the subsequent closure of borders. This has halted planned exports of Nigerian petrol across the continent due to decreasing demand domestically.

Before the crisis in Niger, the Nigerian government had removed petrol subsidies, addressing concerns about smuggling. However, with petrol prices at N600 per unit, many Nigerians couldn’t afford to fuel their vehicles or power their homes, causing a decline in demand.

Experts estimate that Nigeria’s petrol consumption has dropped by more than 30 percent since the subsidy removal, impacting European refiners as well. European exports to Nigeria fell by approximately 160,000 barrels per day between May and July, according to research by Kpler, a global data and analytics firm.

The removal of the petrol subsidy has significantly affected European refiners, as Nigeria was a major market for them. The closure of borders has curtailed both smuggling and legal trade. This situation is particularly significant for the Sahel region, where seven Nigerian states share borders with Niger, making it a hotspot for illegal fuel trafficking. As a result of declining demand, petrol marketers are downsizing and closing stations, with discussions about mergers and acquisitions taking place.

In a 2022 research report titled ‘Transnational Organised Crime Threat Assessment – Trafficking in the Sahel’, the United Nations Office on Drugs and Crime disclosed that Nigeria, passing through Niger to Mali, constitutes one of the four major routes for fuel trafficking into Sahel countries.

Additional routes encompass Nigeria through Benin to Burkina Faso and Mali, Algeria to Mali, and Libya to Niger and Chad. This indicates that two of the routes are reliant on Nigeria for illicit activities.

Joshua Olorunmaiye, the team lead for Energy and Natural Resources Practice at Bloomfield LP, emphasized that fuel trafficking has historically thrived in this region, often involving both informal and structured groups. He suggested that ongoing crises might exacerbate the issue due to heightened insecurity and chaos.

Olorunmaiye also highlighted that the current situation could prompt the Niger junta, led by General Tchiani, to intensify efforts to control unauthorized movements across borders, potentially leading to stricter border controls.

The report attributes fuel trafficking to low fuel prices in Nigeria, Algeria, and Libya, with a substantial amount of trafficked fuel being government-subsidized from these countries. The deregulation policy of the Nigerian Federal Government is anticipated to regulate this flow.

Kelvin Emmanuel, CEO of Dairy Hills Ltd, pointed out that if the Federal Government follows the provisions of the Petroleum Industry Act, fuel prices will adjust in accordance with market conditions. This could discourage smuggling and align daily consumption trends in Nigeria with the benchmark price.

Since the removal of subsidies in May, Nigeria’s daily petrol consumption has dwindled. According to the Nigerian Midstream and Downstream Petroleum Regulatory Authority, the country’s current daily consumption has fallen to 38.33 million litres from the previous 65 million litres before the subsidy reduction.