THE Nigerian National Petroleum Company Limited (NNPCL) has acknowledged its “significant debt to petrol suppliers,” stating that this financial burden threatens the sustainability of fuel supply in the country.
Reports indicate that NNPCL’s $6 billion debt to petrol suppliers has exacerbated the ongoing petrol scarcity in Nigeria, a recurring issue since early 2024.
At various times, NNPCL has attributed the fuel shortages to factors such as logistics challenges and flooding.
However, in a statement released yesterday, NNPCL spokesperson Olufemi Soneye admitted that “this financial strain has placed considerable pressure on the company and poses a threat to the sustainability of fuel supply.”
He added that NNPC Ltd, in accordance with the Petroleum Industry Act (PIA), remains committed to its role as the supplier of last resort to ensure national energy security.
“We are actively collaborating with relevant government agencies and other stakeholders to maintain a consistent supply of petroleum products nationwide,” Soneye stated.
Nigeria, Africa’s most populous nation, continues to grapple with energy challenges, with all state-owned refineries currently non-operational.
The country relies heavily on imported refined petroleum products, with the state-run NNPCL serving as the major importer.
Fuel queues have become a common sight in Nigeria, with petrol prices tripling since the removal of the subsidy in May 2023, rising from around N200 per litre to approximately N800 per litre.
This has further burdened citizens who rely on petrol to power their vehicles and generators due to the country’s longstanding unreliable electricity supply.
In addition to these challenges, the government’s decision to unify forex windows has caused the value of the naira to plummet sharply from $1/N700 to over $1/N1600 on the parallel market.
Consequently, the prices of food and basic commodities have soared, leading to increased inflation and hardship for Nigerians.
Recently, the Independent Petroleum Marketers Association of Nigeria (IPMAN) highlighted that the current landing cost per litre of petrol makes it unfeasible for marketers to import the essential commodity, leaving NNPCL as the sole importer.
IPMAN National Operations Controller Zarama Mustapha explained, “Right now, the landing cost of PMS is over N1,200, excluding marketers’ margin, transportation, and other logistics.
NNPC sells to marketers at around N565, which means there is a subsidy of nearly N600 to N700 at present.”
“Regardless of whether officials claim there is a subsidy or not, the reality on the ground indicates there is a significant under-recovery,” Mustapha added.
Last December, Africa’s leading industrialist, Aliko Dangote, commenced operations at his $20 billion refinery in Lagos, which is designed to process 350,000 barrels per day, with hopes to reach its full capacity of 650,000 barrels per day by the end of the year.
The refinery, despite regulatory challenges, has begun supplying diesel and aviation fuel to marketers in the country, with petrol supply expected to start soon.