The Nigerian National Petroleum Corporation (NNPC) has acknowledged that debts owed to international oil traders are a major factor contributing to the ongoing fuel scarcity across Nigeria. In a statement released on Sunday, NNPC spokesperson Olufemi Soneye confirmed reports from media outlets, attributing the fuel shortage to supply disruptions caused by outstanding debt obligations to international oil traders.
While NNPC admitted to these debts, it did not specify the amount owed to the oil traders.
Background on NNPC’s Debt Situation
Previous reports indicated that NNPC was indebted to oil suppliers by as much as $6.8 billion in subsidy debts. This significant financial burden has made it difficult for the corporation to procure imported petrol products. The company’s statement highlighted the strain these debts have placed on its operations, threatening the sustainability of fuel supplies across the country.
“NNPC Ltd. acknowledges recent reports in national newspapers regarding the company’s significant debt to petrol suppliers. This financial strain has placed considerable pressure on the company and threatens the sustainability of fuel supply,” said Soneye. “In line with the Petroleum Industry Act (PIA), NNPC Ltd. remains dedicated to its role as the supplier of last resort, ensuring national energy security. We are actively collaborating with relevant government agencies and other stakeholders to maintain a consistent supply of petroleum products nationwide.”
Implications of NNPC’s Admission
NNPC’s statement comes amid severe fuel scarcity affecting the nation, which suggests the corporation may struggle to maintain the fixed price of petrol following the removal of the subsidy on May 29, 2023. NNPC also indicated it is seeking financial relief from the federal government, which could mean a return to government intervention, possibly through the reinstatement of a fuel subsidy.
The growing concern over the possible reintroduction of the subsidy has intensified, especially given various reports suggesting that the federal government may have taken this step following the naira’s devaluation. While NNPC has yet to confirm the return of the subsidy, its recent statement implies that federal assistance may be necessary to resolve the company’s debts to international oil traders.
Current Situation
Fuel scarcity has returned to major Nigerian cities, including Lagos and Abuja, with vehicles seen queuing at the few filling stations that have petrol. NNPC, however, has denied owing $6.8 billion in fuel subsidy debt to oil traders, a claim that some believe is contributing to the supply challenges.
Due to the scarcity, major roads in Lagos and Abuja have been noticeably less busy, with many motorists lacking petrol to move around. Even NNPC-owned filling stations have been shut down, leaving motorists waiting outside, hoping the stations might eventually reopen. The product has been sold at prices ranging from N840 to N1,000 per liter at various locations nationwide.
This situation underscores the urgent need for a sustainable solution to Nigeria’s fuel supply challenges, with NNPC and the federal government at the center of efforts to address the crisis.
