Emmanuel OchayiThe Nigerian National Petroleum Company Limited (NNPCL) is facing scrutiny over its sluggish repayment of $3 billion debt owed to oil traders for imported petrol.
Despite making progress in clearing the overdue payments, the pace of repayment remains a cause for concern.
“They are paying, but it’s slow,” revealed a source familiar with the matter, echoing sentiments shared by others in the industry. NNPC, Nigeria’s main petrol importer, is reportedly taking more than 130 days to settle payments, exceeding the standard 90-day period.
The tardiness in settling debts reflects the challenges posed by the gradual phasing out of fuel subsidies since May 2023, which has strained NNPC’s budget for imports. Additionally, escalating global gasoline prices and a weakening naira further exacerbate NNPC’s financial woes.
The recent surge in crude oil prices, nearing $90 per barrel, significantly inflates costs for NNPCL when importing petrol. In February, petrol prices in West Africa peaked at N1,229 per litre, surpassing the government’s price cap by 150%. Although prices have slightly dropped to around N912 per litre, they remain substantially higher than the capped price of N617.
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Despite the mounting financial pressures, NNPCL continues to deny subsidizing imported petrol. Mele Kyari, CEO of NNPC Limited, reiterated this stance in October 2023, emphasizing that the company is recovering full costs from its imports rather than receiving subsidies.
Meanwhile, the emergence of the Dangote Refinery presents a potential solution to Nigeria’s reliance on imported petroleum products. The refinery has commenced supplying diesel and aviation jet fuel to the domestic market, with plans to distribute petrol to marketers starting next month.
Anticipated to become the largest refinery in Africa and Europe upon reaching full operational capacity, the Dangote Refinery aims to alleviate Nigeria’s refining infrastructure deficit.
Abubakar Maigandi, head of the Independent Petroleum Marketers Association of Nigeria, disclosed that local oil marketers have set diesel prices at N1,225 per litre, having secured bulk purchase agreements from the refinery.
Despite numerous attempts to obtain clarification on the debt situation from NNPCL spokesman Olufemi Soneye, responses were not received by press time.
As NNPC grapples with its debt obligations amid challenging market conditions, the progress of the Dangote Refinery offers a glimmer of hope for Nigeria’s energy sector, potentially reshaping the nation’s fuel dynamics in the years to come.
