Monday, April 27, 2015

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On The Road With West Africa’s Fuel Smugglers

Nigeria's fuel subsidy has been underpinning the fuel smuggling trade in West Africa for years, but what effect will its removal have?
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An unofficial petrol station in Togo.

Lomé, Togo:

The journey from the city of Lagos in Nigeria to the Benin-Togo border by boat takes 13 hours on a calm night. At daybreak, wooden boats drop anchor 100 metres off the coast. A dozen teenagers swim up clutching empty yellow plastic jerry cans for the armed smugglers to fill with subsidised Nigerian fuel. These are examined on shore and by 8am the shallows of the bay are awash with hundreds of blue oil drums.

Dozens of local men, women and children from the coastal border town spend each morning rolling fuel containers up onto a stretch of beach separated from Togo at one end and Benin at the other by a thin strait.

Storehouses on this small island receive the five to six hundred barrels that arrive daily; each containing 250 litres of the smuggled fuel with a street value of 150,000 CFA francs ($300). Inside these wooden shacks, teams of women, breathing air thick with vapour, decant fuel into plastic containers. Around them are the homes of families who have moved to the coast to find work in this lively but struggling smuggling community.

From the storehouses the fuel’s journey continues by truck and motorbike, passing checkpoints and police who pocket cuts from this ten-year-old trade route stretching from Benin and Togo out across Ghana and Burkina Faso, up into Mali and throughout the west coast of Africa.

Duties from smuggled fuel avoid central government coffers but are paid in tributes to the town chiefs and regional officials controlling these border towns. They felt the impact of Nigeria’s temporary retraction of the fuel subsidy and would have halted operations had it not been partially reinstated in January.

Local vs. national

Alongside the vibrant town centres, new development projects are underway. Untaxed by the government, this fuel trade has provided more income than probably any government or international investment has for these local leaders.

The overlap and clashing of national and local sovereignty is widespread in Africa, but rarely is there such stability while there is such a concentration of wealth by local officials. Effectively operating as micro-petro-states on either side of the Togo-Benin border, local officials here are largely independent of national law and its enforcement – they administer parallel courts, security forces and formidable revenues by themselves.

There is occasional pressure to demonstrate a tough government stance against smuggling. Raids are invariably violent; several men describe being drenched in canisters of the undocumented fuel while the rest was collected for use and distribution by police. A typical raid on a delivery truck can see the loss of ten barrels worth, or 1.5 million CFA ($3000), as well as the truck.

At sea, there is less trouble from authorities, with no significant coast guard operating between Lagos and the Togo border, but this leaves vulnerability to interception by armed pirates operating with impunity in the Bight of Benin.

Selling fuel

Fuel sellers in towns across the region also work at risk of attack and internment from government security forces. Along the coast road from Togo’s border to its capital Lomé, stalls sell fuel for 400 or 500 CFA ($0.80-$1), around 15-30% cheaper than at licensed petrol stations. Often, teenage boys man the stalls to earn a basic wage. At one stall, barely 50 yards from the town police station, one young fuel-seller tells of another who had been taken to hospital with gunshot wounds that morning following a police raid.

The urban areas are little different. In Lomé, a storage depot – a hot and heady concrete shed within a corrugated steel enclosure behind a mechanics yard – is home to two teenagers and several hundred litres of the smuggled fuel. They guard part of the supply for hundreds of stalls which sell to a city buzzing with motorbikes, taxis and trucks delivering goods across the region from West Africa’s main deep-seaport.

Fuel is sold openly, day and night, from used glass and plastic bottles from the roadside. For the volume of traffic on Lomé’s roads, its licensed filling stations are close to empty. Instead, the city’s motorbikes, taxis, police vehicles and delivery trucks choose to run on this cheaper, unregulated fuel.

And yet those selling the fuel remain under threat of police raids. Sellers tell of having been beaten, having fuel poured over them, and sometimes interned for days without charge. Other times their fuel is simply confiscated, costing sellers up to 200,000 CFA ($400) a turn.

However, sellers see no prolonged or systematic attempt to shut their operations down. Many are proud of their business and its central role in the economy; they see periodic harassment and confiscations as the recourse of police commanders and individual officers meeting quotas rather than a concerted effort to halt illegal trade and sales of fuel. Despite lower profits since the Nigerian subsidy was lowered, selling fuel remains a better prospect for most than finding lawful work.

Fuel subsidy

As Nigeria navigates the phasing out of its subsidy, governments in the region must address the drying up of the spill-over fuel that has helped drive their economies for years.

Cheap Nigerian oil has made illicit exports of fuel a near inevitability given West Africa’s notoriously porous borders and informal and under-regulated trade networks. As the subsidy is removed, illegal fuel sales are expected to trail off. Yet when the Nigerian government did cut the subsidy over the Christmas period, temporarily halting the supply of smuggled fuel, smugglers found alternative sources.

The land routes across Burkina Faso and the northern regions of Ivory Coast, Ghana, Togo, Benin and Nigeria where oil pipelines have been built provided both a site to steal fuel and a means to distribute it. Fuel tapped from new pipelines and storage facilities was sold with much lower purity and performance, was more volatile and was sometimes little more than the by-product from the refining process.

Smugglers and sellers in Nigeria, Benin and Togo have been surviving in economies where oil wealth has been too slow to trickle down in the way governments promised, and they do not appear to be using their networks for smuggling weapons, drugs or people as the subsidy has retained fuel as the far more profitable commodity.

But over the winter when the subsidy was removed, these local chiefs and officials along the old routes no longer profited from the trade. The new stolen fuel trade was instead supporting the insurgencies’ economies in the northern regions of Mali, Ivory Coast and Nigeria.

While local chiefs and officials benefiting from the trade are happy to trade in untaxed fuel, sellers of fuel around the region are more hopeful that their livelihoods will become recognised and licensed. If the fuel subsidy in Nigeria disappears completely, they want support from their own countries to enable them to continue to import fuel legally, with regulation and taxes.

But theirs is not the only livelihood to be affected; cheap fuel supports a vast amount of the formal West African economy. If these people and their business are not addressed in the aftermath of the subsidy removal, many will be left to choose from murkier paths they have until now been only crossing.

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This report is superlative and powerfully on target...Welldone sir!