A curious phenomenon exists in Africa, where countries with very high prices border those where fuel is cheap – making oil smuggling very lucrative.
THE price of crude oil has fallen by more than half in the past one year, touching under $50 for the first time in five years, but the retail price of petrol varies widely across Africa.
All countries have access to the same petroleum prices of international markets, but governments then decide to impose different taxes or subsidies, resulting to a vastly different experience at the pump in different African countries.
The cheapest fuel is to be found in Libya, where a litre of petrol retails for just $0.12, while the most expensive is to be found in Djibouti where it costs $1.70.
Around the world, rich countries tend to pay more for fuel than poor ones. But in Africa, it’s the opposite; poor countries usually have higher retail prices than rich ones.
The reason is two-fold: first, rich countries in Africa tend to be oil exporters, where government subsidies keep prices low. In addition, poor countries in Africa are often landlocked too, so transport costs drive up the prices at the pump.
The economics of neighbourhood
In any case, a curious phenomenon exists in Africa, where countries with very high prices share a border with those where fuel is cheap – making oil smuggling a very lucrative business.
In oil-exporting Angola, for example, fuel is just $0.58/litre, one of the cheapest in Africa. But Angola shares a long and porous border with the Democratic Republic of Congo, which has one of the most expensive retail prices, at $1.58/ litre.
The brutal, underground world of fuel smuggling in the DR Congo is the subject of the critically acclaimed 2010 film Viva Riva!, which won six awards at the African Movie Academy Awards in 2011, the most awards won by a film in a single night in AMAA’s history.
Similarly, an estimated 75% of the fuel sold in Benin is smuggled from Nigeria where it is half as expensive; Togolese and Burkinabe smugglers source their fuel from nearby Ghana.