Big trouble as petrol suppliers shun Nigeria as imports debt hits $6bn – Report

Suppliers are pulling out as Nigeria’s debt from petrol imports has soared to over $6 billion, doubling since early April, according to a report by Reuters.

The Nigerian National Petroleum Corporation (NNPC) is grappling with covering the gap between fixed pump prices and rising international fuel costs.

The report highlighted that NNPC’s struggles began earlier this year, with overdue payments for January imports alone exceeding $3 billion.

“Late payments continue to accumulate, totaling between $4 billion and $5 billion,” Reuters stated, noting that NNPC is obligated to settle bills within 90 days of delivery under contract terms.

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Industry sources revealed that some suppliers have opted out of current tenders after reaching their self-imposed credit limits with Nigeria, demanding payment before further supplies.

“Traders manage risks by setting credit limits per transaction to mitigate exposure,” the report explained, noting adjustments in Nigeria’s recent petrol import tenders.

For July, NNPC plans to import approximately 850,000 tonnes, down from the usual 1 million tonnes in previous months, sources familiar with the matter disclosed.

President Bola Tinubu had announced the removal of petrol subsidies upon assuming office in May last year, citing unsustainable costs amidst dwindling resources. The federal government had projected spending up to N3.3 trillion on petrol subsidies between January and June 2023 before the removal.

The subsidy’s removal has stirred controversy in Nigeria, exacerbating inflation due to higher petrol prices and a weakened currency, thus impacting living conditions negatively.

While rumours swirl about a partial reintroduction of subsidies, the federal government has consistently denied such claims.