Fuel scarcity to linger as NNPC Ltd owns up to debt owed suppliers
…As Nigerians criticise FG
…Independent marketers sell at N950/litre
…NNPC lacks funds needed to rebuild nation’s ageing pipelines — Minister
By our correspondents
The Nigerian National oil company, NNPC Ltd has opened up on a $6 billion debt owed fuel suppliers.
There had been reports in various news mediums revealing that the company’s debt owed fuel suppliers has continued to contribute to the supply crisis being faced nationwide.
Recall that the Nigerian National Petroleum Company Limited (NNPC) said that the shortages were caused by ‘distribution’ challenges, even though it failed to specifically tell Nigerians what caused the current scarcity which had lingered in the country for over seven weeks.
Sources said that last month, the Federal Government bailed out NNPC Ltd with about $300 million to make fuel available in the country.
The intervention of the government was, however, rated as a temporary relief.
Reports by Reuters, an international news agency, had indicated that Afreximbank disbursed $925 million to NNPCL as part of a syndicated $3.3 billion crude oil-backed prepayment facility.
The uncertainty over the payment of the $6 billion, it was learnt, has made most suppliers “hesitant” in bringing in products.
It was gathered that NNPC Ltd “solely imports the product using supply agents.”
As at yesterday, findings confirmed that the national oil firm was “weighed down by the over $6 billion piled up liabilities.”
The NNPC is “struggling to supply dealers due to shortage of product at its tanks, “an authoritative source said yesterday.
“Bulk sales of ships and trucks to depot owners have slowed down in the last five days due to shortage of supply.
“No bulk sales has happened since Tuesday, which heightened the scarcity in the downstream sector, “ the source said.
An oil chief who is in the know of the goings-on in the industry linked the fuel queues being experienced in the last eight weeks” largely to the reduction in supply of products by suppliers who were being owed.”
“I was aware that at some point in mid-August the Federal Government had to come in by giving money to NNPC to defray some of the outstanding liabilities and boost confidence of the suppliers to continue.
“However, what was paid was about $300 million which only helped in getting reprieve for about a week before the queues fully returned,” he said.
Another informed source said: “Suppliers of petrol are hesitant about supplying new products to the Nigeria National Petroleum Company Limited (NNPC Ltd) due to piling debts.
”At present at least five vessels originally intended for supply to Nigeria have refused to discharge fuel to NNPC due to fear of payment.
“The situation has increased pressure on the petroleum company which has now resorted to rationing the stock it has while appealing to its long-term suppliers not to halt supplies.”
In a report, Reuters noted: “Nigeria’s debt to gasoline suppliers has surpassed $6 billion – doubling since early April – as state oil firm NNPC struggles to cover the gap between fixed pump prices and international fuel costs, under rising cost of living.”
The agency said the company has still not paid for some January imports, and the late payments amount to $4 billion to $5 billion.
Under contract terms, NNPC is meant to pay within 90 days of delivery.
“The only reason traders are putting up with it is the $250,000 a month (per cargo) for late payment compensation,” one industry source said.
“At least two suppliers already stopped participating in recent tenders after hitting self-imposed debt exposure limits to Nigeria, the sources said, meaning they will not send more gasoline until they receive payments.
“Nigeria’s tenders to buy gasoline in June and July were smaller, traders said. NNPC will import via tender about 850,000 tonnes in July, two of the sources said, down from the typical 1 million tonnes in previous months.”
In a press statement on Sunday, the Chief Communications Officer of the NNPC Ltd, Femi Soneye noted that the debt poses a threat to the sustainability of fuel supply further confirming the suspicions industry stakeholders had tried to communicate to Nigerians.
According to the statement, the NNPC Ltd said it has acknowledged recent reports in national newspapers regarding the company’s significant debt to petrol suppliers.
“This financial strain has placed considerable pressure on the Company and poses a threat to the sustainability of fuel supply.”
“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.
“We are actively collaborating with relevant government agencies and other stakeholders to maintain a consistent supply of petroleum products nationwide,” the statement read.
Meanwhile, Motorists and Commuters have lamented the hike in fares following the increase in fuel price due to shortage across the country.
Checks over the weekend by Nigerian NewsDirect revealed that independent filling station in Ogun state along Lagos-Abeokuta sell PMS at the rate ranging from N950 to N1000, While Mobil Oil and NNPC sell PMS at the range of N585 to N760.
In some parts of Lagos island like Ajah, findings reveal that a 10-litre container of the product is sold as high as N12,000 at roadside black markets.
At AP filling Station on Awolowo Road Ikoyi, it was observed that buyers crowded the facility in their desperation to buy, as the outlet was selling relatively cheaper at N720 per litre.
Mobil filling station on the same road was also selling but with queues while the nearby Total filling station was not selling and was completely deserted because it had no product.
At NNPC filling station at Obalende, only buyers with jerrycans, generators and motorcycle tanks were being sold to.
Although, the station was dispensing at N568 per litre but a buyer had to pay N1,500 first before being attended to.
Again, the two NNPC filling stations on Egbeda-Idimu Road were submerged with queues, just as Eterna, Petrocam, Omalad, Alpha, Al-Moruf, IIG, NNPC, AP, and Mobil filling stations all located along the Isheri-Igando-LASU Road had no fuel.
Speaking with NewsDirect, a transporter in Ogun state, Mr Yomi Akinsanya plying Sango-Abeokuta said that “for me to work today I had to buy fuel at the rate of N980.”
Akinsanya said “before we used to carry passengers from Sango to Abeokuta at the rate of N1200, but now it is N1,700 and N2,000 on Monday morning during the rush hour.”
He added that the government needs to intervene in the price of fuel because it is becoming more unbearable. Many drivers are quitting the transport business due to the high cost of maintenance.
Explaining how the hike in transport cost has affected her, Mrs Ogunyinka Funmilola, a Lagos resident, said, “The fuel scarcity has affected everyone in one way or the other. Before the hike, commuting from Ikeja to Yaba was N500, but now it’s N700.
“Now, when I’m going out, I have to be sure of where I’m going and be sure that who I’m going to meet is around so I won’t waste my time, energy, and money.
“The government should ensure the availability of fuel and diesel. There’s always traffic every day due to fuel scarcity and this affects people’s productivity.
“As a business owner, I now have to add the cost of transport to the cost of goods, and this makes them more expensive. I even heard that some people sleep in their offices during the week and go home on weekends. It’s that bad.”
Also, a motorist at Oshodi park during the weekend identified as Mr Tude, told our correspondent about the impact of the fuel scarcity on his business.
According to him, business has been down because people only go out when they need to.
“I’ve been in this park since morning but there are no passengers because everyone is managing what they have, and no one is going out.
“Nigeria has refineries, so why are we suffering from fuel scarcity? The government, the NNPC and marketers should work on a lasting solution to this issue because everyone is suffering,” he said.
…NNPC must sell PMS above landing cost to combat smuggling
The Minister of State for Petroleum, Senator Heineken Lokpobiri has said that the Nigerian National Petroleum Corporation (NNPC) Ltd lacks the financial resources needed to rebuild the nation’s ageing pipelines.
This is even as he said that NNPC needs to sell imported fuel above landing cost to combat smuggling.
The Minister made this statement at the 2024 Energy and Labour summit in Abuja, where he also pointed fingers at security agencies for their complicity in aid of smuggling activities.
He mentioned that smugglers will continue to thrive as long as NNPC imports fuel and sells it below the landing cost.
“If NNPC imports PMS and sells to marketers at perhaps N600 or below, there’s no way that smuggling can stop.
“When smugglers are taking the products outside the country, even if you put all the policemen on the road, they are Nigerians; you and I know the answer (response),” he said.
Furthermore, Lokpobiri acknowledged that fuel smuggling from Nigeria to neighbouring countries is a persistent issue that cannot be fully eliminated.
He also explained that the NNPC lacks the financial resources needed to rebuild the nation’s aging pipelines, which have been a significant factor in economic sabotage through vandalism and crude oil theft, draining vital oil revenue.
He mentioned that “the old, corroded pipelines, some of which date back to the 1960s and 1970s, are easily vandalised,” thus facilitating the illegal transport of fuel.
“The reason why pipeline vandalism is very easy to do is because the pipelines have all expired; they are completely corroded. So, anybody can just go and tap it, and the thing is busted.
“The challenge lies in transporting it to terminals due to the deteriorated state of the pipelines.”
In addition, Lokpobiri called for a public-private partnership to address the infrastructure issues.
“That is why we have to go for the global model – PPP. We have to get the private sector to come in,” he said.
