NNPCL Admits Debt to Petrol Suppliers, Fuel Queues Likely to Continue

The Nigerian National Petroleum Company Limited (NNPCL) has finally admitted that its significant debt to petrol suppliers is a major factor contributing to the ongoing fuel shortages across the country. This admission comes after months of fuel scarcity, which has been a recurring issue since the beginning of 2024.

NNPCL’s spokesman, Olufemi Soneye, acknowledged in a statement released on Sunday that the company’s financial struggles are putting immense pressure on its ability to sustain a steady supply of fuel. “This financial strain has placed considerable pressure on the company and poses a threat to the sustainability of fuel supply,” Soneye said.

There have been widespread reports that NNPCL owes petrol suppliers a staggering $6 billion, exacerbating the fuel crisis in Nigeria. Previously, the company had attributed the supply shortages to various logistical challenges and natural disasters, including flooding. However, this latest statement from NNPCL highlights the deep financial difficulties the company is facing.

NNPCL, as the major importer of refined petroleum products in Nigeria, plays a critical role in ensuring the nation’s energy security. Despite the challenges, Soneye assured Nigerians that the company is committed to its responsibilities under the Petroleum Industry Act (PIA). “In line with the Petroleum Industry Act (PIA), NNPC Ltd remains dedicated to its role as the supplier of last resort, ensuring national energy security,” he stated. He also emphasized that NNPCL is actively collaborating with relevant government agencies and other stakeholders to maintain a consistent supply of petroleum products across the country.

Nigeria, the most populous country in Africa, is heavily reliant on imported refined petroleum products due to the non-operational state of its refineries. Since the removal of the fuel subsidy in May 2023, the price of petrol has tripled, rising from around ₦200 per litre to approximately ₦800 per litre. This increase has had a severe impact on citizens, many of whom depend on petrol to power their vehicles and generators, especially given the country’s unreliable electricity supply.

The situation has been further complicated by the government’s recent unification of foreign exchange (forex) windows, which has led to a dramatic devaluation of the naira. The exchange rate has plummeted from ₦700 to over ₦1,600 per US dollar on the parallel market, driving up the cost of food and other basic commodities and exacerbating inflation.

The Independent Petroleum Marketers Association of Nigeria (IPMAN) has also highlighted the challenges faced by petrol marketers. According to Zarama Mustapha, IPMAN’s National Operations Controller, the current landing cost of petrol is over ₦1,200 per litre, making it unfeasible for marketers to import the product. “NNPC sells to marketers at ₦565 or so. That means there is a subsidy of almost ₦600 to ₦700 as of now,” Mustapha explained. He noted that despite official statements, there is a clear indication of under-recovery, or an indirect subsidy, being applied to the petrol pricing.

Meanwhile, the Dangote Refinery, a $20 billion facility in Lagos, has started operations with an initial capacity of 350,000 barrels per day, aiming to reach 650,000 barrels per day by the end of the year. While the refinery has begun supplying diesel and aviation fuel to marketers, petrol production is expected to commence soon, potentially offering some relief to the ongoing crisis.