Widespread smuggled gasoline costs economy, lives

Up to 1,000 people die or are wounded every year in accidents caused by low-quality, high-lead smuggled gasoline that consumes victims in fiery accidents, according to Benin’s Ministry of Commerce.

In 2007 the Benin government estimated that its oil-producing neighbour, Nigeria, supplied 551 million litres of contraband fuel, known as “kpayo” – “bad quality” in the local Fon language – compared to the regulated 81 million litres sold at gas stations in Benin.

“Kpayo” is sold at roadside stands at about half the US$1.33/litre price for gasoline at petrol stations.

Open market

Since the 1980s when Nigeria hit economic problems and a currency devaluation, the country has flooded Benin with its low-quality, commercially-inferior fuel, said Claude Allegbe, a director in Benin’s Ministry of Commerce: “At one point, maybe about 10 years ago, we had asked Nigerian authorities to move its gas stations farther away from the [Benin] border [away from known smuggling networks], but that does no good now since gasoline can be purchased just about anywhere in Nigeria.”

One smuggler based in Benin’s economic capital Cotonou told IRIN each wholesaler has his source. “We get the gasoline much cheaper there [Nigeria]. The price is never the same [depending on your source]. It can cost 30 US cents to more than 40 cents/litre. It depends.” He said even after delivery costs, he can still make about 20 cents per litre.

The average monthly income in Benin as of 2007 is less than $50, according to the World Bank.

But what this deadly gasoline earns hundreds of wholesalers and numerous street vendors does not balance out what it is costing the national economy, said the Commerce Ministry’s Allegbe. “This is an enormous drain on national resources.”

He added the state collects taxes on only about 30 percent of fuel sales, since most gas purchases are illegal – funnelled away from the watch of state tax collectors.

Accidents

Allegbe said smuggled gasoline, which also escapes government lead-limit controls, is not only costing tax earnings but also lives; smuggled gasoline flare-ups have led to dozens of deadly accidents in the past two years.

In June a gasoline container for sale at a street stand caught fire, which gutted a nearby pharmacy.

Doctors say the lead-heavy noxious fumes are causing deadly respiratory illness. (Read about Benin’s worsening air pollution here.)

Fighting back

Shortly after taking office in 2006 the government formally banned the sale of smuggled gasoline in Benin.

Photo: Godefroy Chabi/IRIN

Roadside smuggled gasoline stand, Cotonou

It announced its intention to convert street vendors of the gasoline and an estimated 2,000 wholesale Beninese and Nigerian smugglers based in Benin to agric ultural production. But to date, local gasoline vendors told IRIN they have not heard anything about government programmes or investments for this effort.

In 2007 government officials broke the state monopoly on official gasoline sales, then controlled by the National Society for the Sale of Petroleum Products, by authorising the construction and operation of private gas stations. The Commerce Ministry’s Allegbe told IRIN there are approximately 150 private gas stations nationwide as of October 2008.

But sitting at a table in Cotonou lined with plastic bottles filled with discounted gasoline, vendor Paul Kessou, 28, told IRIN he has no intention of being chased out of business. “I would never give up this business, because it brings me the little revenue that I have.”

He added that his father, who died five years ago, had sold smuggled fuel his entire life.

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