The Nigerian National Petroleum Company Limited (NNPCL) has finally acknowledged its substantial debt to petrol suppliers, warning that this financial burden threatens the sustainability of fuel supply across the nation.
Recent reports indicate that NNPCL’s outstanding debt of $6 billion has exacerbated the ongoing petrol scarcity that has plagued Nigeria since the start of 2024. Throughout this period, the NNPCL has attributed the persistent shortages to various factors, including logistics challenges and flooding.
However, in a statement released on Sunday, NNPCL spokesman Olufemi Soneye revealed that the company’s financial difficulties are significantly straining its operations. “This financial strain has placed considerable pressure on the company and poses a threat to the sustainability of fuel supply,” Soneye stated.
Despite these challenges, the NNPCL remains committed to fulfilling its role as the “supplier of last resort,” as mandated by the Petroleum Industry Act (PIA). Soneye emphasized that the company is working closely with relevant government agencies and other stakeholders to ensure a consistent supply of petroleum products nationwide.
Nigeria, Africa’s most populous nation, continues to face significant energy challenges, with all state-owned refineries currently non-operational. The country is heavily dependent on imported refined petroleum products, with the state-run NNPCL being the primary importer. Fuel queues have become a common sight, and the removal of fuel subsidies in May 2023 has caused petrol prices to triple, rising from approximately ₦200/litre to about ₦800/litre. This has further burdened citizens, who rely on petrol to power their vehicles and generators amid the country’s ongoing electricity crisis.
In addition to the fuel price hike, the government’s decision to unify foreign exchange windows has led to a sharp devaluation of the naira, with the exchange rate plunging from $1/₦700 to over $1/₦1600 in the parallel market. This has resulted in soaring prices for food and basic commodities, as Nigerians grapple with escalating inflation.
The Independent Petroleum Marketers Association of Nigeria (IPMAN) recently highlighted the challenges faced by petrol marketers in importing fuel, pointing out that the landing cost per litre of petrol has become prohibitively expensive. IPMAN National Operations Controller, Zarama Mustapha, explained that the current landing cost of Premium Motor Spirit (PMS) exceeds ₦1,200, while NNPC sells to marketers at around ₦565. “This indicates a subsidy of nearly ₦600 to ₦700 per litre, whether officially acknowledged or not,” Mustapha noted.
Meanwhile, Africa’s foremost industrialist, Aliko Dangote, has commenced operations at his $20 billion refinery in Lagos, which began supplying diesel and aviation fuel to marketers in the country. The refinery, which aims to reach its full capacity of 650,000 barrels per day by the end of the year, is expected to start supplying petrol soon.
