Lagos, Abuja, Others Hit With Fuel Queues Amid NNPC’s $6 Billion Petrol Payment Issues

Petrol stations across Nigeria are experiencing lengthy queues, reflecting concerns about fuel shortages due to the Nigerian National Petroleum Company (NNPC) Limited‘s $6 billion backlog in petrol payments.

BusinessDay’s investigation revealed that NNPC owes around $6 billion to international traders for imported petrol, with payments now delayed beyond the typical 90 days.

Reuters reported that overdue payments of $4 billion to $5 billion for January imports alone have led international petrol suppliers to withdraw from recent tenders.

An industry insider disclosed to Reuters, “The only reason traders are putting up with it is the $250,000 a month (per cargo) for late payment compensation.”

These payment delays point to the return of fuel subsidies, which were scrapped in May 2023. The subsidies drain NNPC’s cash reserves, affecting its ability to import petrol and finance President Bola Tinubu’s government.

Two suppliers have already stopped participating in tenders after reaching their debt exposure limits to Nigeria. They will not send more gasoline until they receive payments.

NNPC’s suppliers, including international traders like Vitol, Mercuria, and Gunvor, as well as Nigeria-based trading houses, declined to comment as they were not authorized to speak to the media.

BusinessDay found that traders, while thriving in risky environments, limit their credit exposure to avoid excessive risk with one borrower. Consequently, Nigeria’s tenders for petrol in June and July were smaller.

NNPC will import about 850,000 tonnes in July, down from the usual 1 million tonnes in previous months, according to sources.

As a result, Nigerians are facing renewed petrol scarcity and long queues in major cities such as Lagos and Abuja.