The current payment backlog is said to have affected even the government’s ability to shore up finances by trying to control costly energy subsidies. Many sources have all concluded that the depreciation of Naira currency and raising global fuel price has increased the effective subsidy that NNPC is paying.
The current Petrol issue overwhelming Lagos motorists is very much connected to the $3 billion that the Nigerian National Petroleum Company owes to fuel traders from all the imported Petrol.
According to a source with knowledge about the Matter,
“They are paying, but it’s slow”, said.
Some sources also said that NNPC—Nigeria’s major source of petrol imports—would always take up to 130 days to make the payments instead of 90 days as expected by the company.
One of the NNPC spokesmen also reported that the company was “unaware of any such debt nor any financial issues of such magnitude”.
“Our focus remains on sustaining sufficiency in the supply of petroleum products in Nigeria,” the spokesperson said.
Still in the supply, NNPCL’s supplier, which includes international traders like Vital, Mercuria, Gunvor and the Nigerian -based traders.
Nigeria has subsidised fuel for years to keep pump prices affordable to citizens, but when President Bola Tinbu came into power, he removed them, causing fuel prices to triple as part of his wider reform. The payment delay currently underscores the return of fuel subsidies, which were scrapped in 2023.
“It’s hard to overstate the significance of fuel subsidies for the administration,” said Clementine Wallop, director for sub-Saharan Africa at the political risk consultancy Horizon Engage.
“It was subsidy removal and exchange rate reform that had investors and lenders initially positive about his administration, and it was their removal Tinubu hoped would give his team the ability to spend in the many other areas that need funding.”
Because of the mismanagement and underinvestment in state-owned oil refineries, Nigeria is almost reliant on fuel imports from other countries.
Raising the global petroleum price, coupled with a weak Naira, has also negatively impacted NNPCL’s ability to import fuel.
“The government still needs to begin formulating a plan to remove the fuel subsidy when conditions allow,” Tellimer’s Patrick Curran said.
Motorists were seen queuing up for Petrol across Lagos, due to the shortage of fuel from the depot’s, last week.
In some reports, it was stated that the queues at some petrol stations, which happened in some parts of Lagos early last week, were because of the gap related to the Easter break, which affected the supply from tanker drivers.
Currently, NNPCL is rationing supply, according to a source in the industry.
A petroleum marketer’s sources also said that the supply of Petrol has begun after the Easter holiday and also the depot’s operated by major marketers and Depot and petroleum Products Marketers Association, DAPPMA will begin to receive full supply beginning from Friday to Saturday.
NNPC Limited said that the tight supply happening in most gas stations in Lagos was associated with an issue they had in one of the Depot areas.
Normalcy will soon be restored, and the NNPC Retail Limited has since resolved the issue in the affected area.
The Nigerian National Petroleum Company has urged all motorists, especially in Lagos, to stop panicking. Everything is in place to curb the matter. The company proposes a sustained sufficiency in the supply of petroleum products in the affected area.
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