The recent declaration by the Nigerian National Petroleum Corporation Limited (NNPCL) about its inability to sustain fuel supply has sparked concerns among industry experts, who believe it might be a calculated move to justify a future increase in petrol prices.
On Sunday, NNPCL’s Chief Corporate Communications Officer, Olufemi Soneye, confirmed that the national oil company is facing significant financial difficulties due to unpaid debts to fuel suppliers. However, Soneye did not disclose the specific amount owed.
“NNPC Ltd has acknowledged 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 poses a threat to the sustainability of fuel supply,” Soneye stated.
Industry analysts suggest that this financial strain could be part of a broader strategy by the government to raise petrol prices, potentially to as high as N950 or N1,000 per liter.
Allegations have surfaced that government officials have been hinting at this narrative for the past two weeks.
On Monday, the Minister of State for Petroleum, Heineken Lokpobiri, urged NNPCL to stop selling fuel below landing costs, asserting that this would help curb the smuggling of petrol to neighboring countries.
The Major Energy Marketers Association of Nigeria (MEMAN) recently disclosed that the landing cost of petrol as of July 2024 was N1,117 per liter.
The association also revealed that the landing costs for Diesel (AGO) and Aviation Turbine Kerosene (ATK) stood at N1,157 and N1,217 per liter, respectively, for vessels landing in Apapa, Lagos.
An independent oil marketer, who wished to remain anonymous, noted that a price increase was almost inevitable, given the realities of a fully deregulated market.
“The NNPCL remains the main importer, with private importation still limited.
This situation is exacerbated by Nigeria’s declining crude oil output, which hampers the country’s ability to import refined products,” the marketer explained, referencing a recent report by the Organisation of Petroleum Exporting Countries (OPEC) highlighting declining output in several nations, including Nigeria.
Former chairman of the Independent Petroleum Marketers Association of Nigeria (IPMAN) Ejigbo Depot in Lagos, Mr. Akin Akinade, highlighted the challenges faced by marketers due to the lack of direct supply from NNPC.
“We buy from Third Party suppliers at N840, N850 per liter, and by the time you add transportation costs, there is no way our members would sell below the current prices,” Akinade said. “If the prices drop, we will also lower ours, but we are in business to make money,” he added.
Similarly, Chief Executive Officer of 11 Plc (formerly Mobil Nigeria), Tunji Oyebanji, expressed concerns about the sustainability of selling fuel below cost. “Selling below the cost, whether from import or local refineries, is not sustainable.
If they sell at an economic price, perhaps others can import, supply will improve, and the financial strain will not be on NNPCL alone.
It’s either that or these supply disruptions will continue indefinitely,” Oyebanji stated.
He also questioned why the NNPCL had not been more transparent about the situation earlier, instead of issuing denials.
