Petrol Prices Surge as NNPC Faces $6 Billion Import Payment Delay

Long queues have resurfaced at petrol stations across Nigeria, sparking renewed concerns over fuel shortages as the Nigerian National Petroleum Company (NNPC) Limited grapples with a $6 billion backlog in petrol payments.

This payment delay has significantly impacted the importation of petrol, causing a spike in fuel prices and widespread frustration among motorists.

According to industry insiders, NNPC owes approximately $6 billion to international traders, with overdue payments for January imports alone surpassing $4 billion to $5 billion.

This delay has forced suppliers to hit self-imposed debt exposure limits to Nigeria, causing a reduction in the volume of petrol supplied.

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

However, patience is running thin, and at least two suppliers have already pulled out of recent tenders, signaling a troubling trend.

As a result of these disruptions, Nigeria’s tenders for petrol in June and July were noticeably smaller.

NNPC plans to import around 850,000 tonnes of petrol in July, down from the usual 1 million tonnes. This reduction has had immediate consequences for Nigerian consumers.

Reports from major cities such as Lagos and Abuja indicate a resurgence of long queues at petrol stations.

In Lagos, fuel prices have skyrocketed, with some stations selling petrol for as high as N780 per litre, a significant jump from NNPC’s retail price of N580.

The scarcity has also given rise to black market activities, with sellers offering fuel at inflated prices ranging from N700 to N900 per litre.

The Group Chief Executive Officer of NNPC, Mele Kyari, acknowledged the supply issues and assured the public that efforts are underway to address the situation.

“We are working diligently to roll out more CNG mother stations across the country and ensure a stable supply of petrol,” Kyari stated.

He added that the construction of six new CNG mother stations and three LNG stations would help bring gas closer to consumers, ultimately reducing transportation costs and making fuel more accessible.

Despite these assurances, the current crisis has raised questions about the sustainability of Nigeria’s fuel subsidy system, which was scrapped in May 2023 but has effectively returned through capped pump prices.

The International Monetary Fund (IMF) has projected that the implicit subsidy will cost Nigeria an estimated N8.43 trillion of its projected N17.7 trillion in oil revenue for the year.

Motorists and business owners alike are feeling the pinch of the fuel scarcity.

Ahmad Zakari, a civil engineer in Abuja, recounted his recent ordeal: “Today, we couldn’t get petrol at any of the usual filling stations around Jabi, Utako, and Kubwa Expressway. The queues were unbearable, and prices were exorbitant.”

The NNPC has promised to resolve the supply issues promptly, but the long-term solution appears to hinge on increasing domestic refining capacity.

The completion of the 650,000 barrel-per-day Dangote refinery in Lagos and the revitalization of the NNPC-controlled refinery in Port Harcourt are seen as critical steps in reducing Nigeria’s dependency on imported petrol.

For now, Nigerians must navigate the challenges posed by the current fuel scarcity, hoping that the NNPC’s efforts will soon bear fruit and bring much-needed relief to the nation’s economy.