The ongoing petrol shortage in Nigeria is set to continue as mounting debts, a lack of liquidity, and foreign exchange challenges impede the Federal Government’s ability to sustain fuel importation.
The Nigerian National Petroleum Company Limited (NNPC) has admitted to owing petrol suppliers $6 billion, a debt that has put significant pressure on its operations and threatens the sustainability of fuel supply across the country.
Foreign Exchange Woes Hamper Importation
Oil marketers have voiced concerns over their inability to import petrol due to the surging foreign exchange rate, currently pegged at $1,500/$.
This spike has driven the landing cost of petrol to over N1,100 per litre, making it increasingly difficult for marketers to maintain a steady supply.
“NNPC Ltd has acknowledged recent reports in national newspapers regarding the company’s significant debt to petrol suppliers,” stated Olufemi Soneye, Chief Corporate Communications Officer of NNPC Ltd.
“This financial strain has placed considerable pressure on the company and poses a threat to the sustainability of fuel supply.
We are actively collaborating with relevant government agencies and other stakeholders to maintain a consistent supply of petroleum products nationwide.”
The Struggle of Independent Marketers
Independent Petroleum Marketers Association of Nigeria (IPMAN) members have been particularly hit hard by the supply chain disruptions.
Excluded from direct bulk supply from NNPC, they have been forced to purchase petrol from private depot owners at exorbitant rates, exacerbating the scarcity and leading to widespread fuel queues across the nation.
“For some weeks now, products have not been supplied to IPMAN members. We have been buying from other tank farm owners and major marketers,” lamented IPMAN’s Public Relations Officer, Chief Chinedu Ukadike.
He added that the absence of direct allocations to IPMAN members has led to “profiteering and bottlenecks” in the supply chain, driving up costs and worsening the petrol shortage.
Economic Impact and Calls for Reform
The Nigeria Employers Consultative Association (NECA) has highlighted the broader economic impact of the ongoing fuel crisis.
According to NECA’s Director-General, Wale-Smatt Oyerinde, the fluctuating foreign exchange market, low crude oil production, and high monetary policy rates are constraining business activity and dampening economic growth.
“Despite positive GDP growth in Q2 2024, Nigeria’s economic outlook remains challenged by both global and domestic factors,” Oyerinde said.
He urged the government to implement strategic policy interventions to stabilize the economy, including reforms in agriculture, industry, and human capital investment.
Potential Relief from Dangote Refinery
As the crisis deepens, stakeholders are looking to the Dangote Refinery for relief.
The refinery, with a capacity of 650,000 barrels per day, is expected to alleviate some of the supply constraints when it becomes fully operational.
PETROAN Chairman, Joseph Ehimen, expressed optimism that the refinery’s output would help stabilize the market and reduce the fuel shortage.
“The sector was deregulated to bring about positive changes, but the ongoing fuel shortage has wiped out these gains,” Ehimen noted.
“If all required arrangements are made, Dangote Refinery should be able to assist in ending the fuel shortage.”
