•Five vessels refuse to discharge petrol
•Credit transactions normal in oil business, says company’s spokesman
From fresh facts that came to light yesterday, the current nationwide fuel scarcity is accentuated by the sum of $6 billion owed suppliers by the Nigeria National Petroleum Company Limited (NNPCL).
The supply agents have become reluctant about importing premium motor spirit (PMS) for the NNPCL.
As a result, the oil firm has been rationing stock and prevailing on major suppliers not to cut off supply.
Five vessels meant for Nigeria have refused to discharge fuel to NNPCL due to fear of payment, one of the major suppliers told THE NATION yesterday.
But the Chief Corporate Communications Officer of NNPC Limited, Mr. Olufemi Soneye, assured that the oil firm was alive to its responsibility.
He said in the oil trading business, transactions are often carried out on credit with intermittent outstanding balances.
Sources said that last month, the Federal Government bailed out NNPCL with about $300 million to make fuel available in the country.
The intervention of the government was, however, rated as a temporary relief.
Reports by REUTERS, an international news agency, had indicated that Afreximbank disbursed $925 million to NNPCL as part of a syndicated $3.3 billion crude oil-backed prepayment facility.
The uncertainty over the payment of the $6 billion, it was learnt, has made most suppliers “hesitant” in bringing in products.
It was gathered that NNPCL “solely imports the product using supply agents.”
As at yesterday, findings confirmed that the national oil firm was “weighed down by the over $6 billion piled up liabilities.”
The NNPC is “struggling to supply dealers due to shortage of product at its tanks, “an authoritative source said yesterday.
“Bulk sales of ships and trucks to depot owners have slowed down in the last five days due to shortage of supply.
“No bulk sales has happened since Tuesday, which heightened the scarcity in the downstream sector, ” the source said.
An oil chief who is in the know of the goings-on in the industry linked the fuel queues being experienced in the last eight weeks” largely to the reduction in supply of products by suppliers who were being owed.”
“I was aware that at some point in mid-August the Federal Government had to come in by giving money to NNPC to defray some of the outstanding liabilities and boost confidence of the suppliers to continue.
“However, what was paid was about $300 million which only helped in getting reprieve for about a week before the queues fully returned,” he said.
Another informed source said: “Suppliers of petrol are hesitant about supplying new product to the Nigeria National Petroleum Company Limited (NNPCL) due to piling debts.
“At present at least five vessels originally intended for supply to Nigeria have refused to discharge fuel to NNPC due to fear of payment.
“The situation has increased pressure on the petroleum company which has now resorted to rationing the stock it has while appealing to its long-term suppliers not to halt supplies .
Why and how NNPCL incurred $6 billion liabilities
In a report, Reuters said: “Nigeria’s debt to gasoline suppliers has surpassed $6 billion – doubling since early April – as state oil firm NNPC struggles to cover the gap between fixed pump prices and international fuel costs, under rising cost of living.
The agency said the company has still not paid for some January imports, and the late payments amount to $4 billion to $5 billion.
Under contract terms, NNPC is meant to pay within 90 days of delivery.
“The only reason traders are putting up with it is the $250,000 a month (per cargo) for late payment compensation,” one industry source said.
Reuters said: “At least two suppliers already stopped participating in recent tenders after hitting self-imposed debt exposure limits to Nigeria, the sources said, meaning they will not send more gasoline until they receive payments.
“Nigeria’s tenders to buy gasoline in June and July were smaller, traders said. NNPC will import via tender about 850,000 tonnes in July, two of the sources said, down from the typical 1 million tonnes in previous months.”
More challenges and solution(s)
Recently, the Minister of State for Petroleum (Oil), Senator Heineken Lokpobiri, said it was imperative for the NNPC Limited to adjust its pricing strategy for imported fuel to curb smuggling.
He also admitted that NNPC Limited had financial constraints in maintaining and rebuilding Nigeria’s ageing pipelines.
He said the weak pipelines are susceptible to vandalism.
Lokpobiri, who spoke at the 2024 Energy and Labour Summit in Abuja, said selling imported fuel below the landing cost is a key factor fueling smuggling activities.
He said: “If NNPC imports PMS and sells to marketers at perhaps N600 or below, there’s no way that smuggling can stop.
“When smugglers are taking the products outside the country, even if you put all the policemen on the road, they are Nigerians; you and I know the answer.”
“These pipelines, some dating back to the 1960s and 1970s, are highly susceptible to vandalism and crude oil theft, which significantly impacts the nation’s oil revenue.
“The old, corroded pipelines, some of which date back to the 1960s and 1970s, are easily vandalized,” Lokpobiri explained.
“The reason why pipeline vandalism is very easy to do is because the pipelines have all expired; they are completely corroded.
“So, anybody can just go and tap it, and the thing is busted. The challenge lies in transporting it to terminals due to the deteriorated state of the pipelines.”
NNPC reacts
NNPCL’s Soneye could not immediately confirm the exact liabilities to the suppliers.
He, however, said in oil trading, transactions on credit were normal.
He said: “In the oil trading business, transactions are often carried out on credit. So, it is normal to have outstanding balances at certain times.
“Additionally, through our subsidiary, NNPC Trading, we maintain open trade credit lines with several traders. I will need some time to provide you with the exact amount.” (The Nation)
