The Nigerian National Petroleum Company Limited (NNPCL) has finally acknowledged its “significant debt to petrol suppliers,” admitting that it threatens the sustainability of the country’s fuel supply.
Reports suggest that a $6 billion debt owed by NNPCL to petrol suppliers has exacerbated the ongoing fuel scarcity in Nigeria, an issue that has persisted since the start of 2024.
Previously, NNPCL attributed the fuel shortages to various factors, including logistical challenges and flooding.
However, in a statement released on Sunday, NNPCL spokesperson Olufemi Soneye revealed that “this financial burden has created substantial pressure on the company and jeopardizes the sustainability of fuel supply.”
“In accordance with the Petroleum Industry Act (PIA), NNPC Ltd remains committed to its role as the supplier of last resort, ensuring national energy security.
“We are working closely with relevant government agencies and stakeholders to ensure a steady supply of petroleum products across the nation.”
Nigeria, the most populous country in Africa, faces significant energy challenges, with all of its state-owned refineries currently non-operational. The nation heavily relies on imported refined petroleum products, with NNPCL being the primary importer.
Fuel queues are a common sight across the country. Since the removal of the fuel subsidy in May 2023, petrol prices have tripled, rising from approximately ₦200 per litre to around ₦800 per litre. This has further burdened citizens who rely on petrol to power their vehicles and generators, amid long-standing issues with erratic electricity supply.
The government also unified its forex windows, causing the value of the naira to plummet from $1/₦700 to over $1/₦1600 in the parallel market. Consequently, food and basic commodity prices have soared, leaving Nigerians grappling with severe inflation.
Recently, the Independent Petroleum Marketers Association of Nigeria (IPMAN) stated that the high landing cost of petrol has made it impossible for marketers to import the product as NNPCL does.
“Currently, the landing cost of PMS is over ₦1,200, excluding the marketers’ margin, transportation, and other logistics,” said Zarama Mustapha, IPMAN’s National Operations Controller.
“NNPC sells to marketers at around ₦565 per litre, which implies a subsidy of nearly ₦600 to ₦700 per litre.”
“Whether government officials acknowledge it or not, the situation on the ground clearly indicates there is an under-recovery mechanism in place.”
In December, Africa’s leading industrialist Aliko Dangote began operations at his $20 billion refinery in Lagos, which has a capacity of 350,000 barrels per day. The refinery, which has faced regulatory challenges, aims to reach its full capacity of 650,000 barrels per day by the end of the year. It has already started supplying diesel and aviation fuel to marketers in Nigeria, with petrol supply expected to follow soon.