NNPC finally admits owing oil traders as petrol scarcity bites harder

The Nigerian National Petroleum Company (NNPC) Limited has admitted to owing suppliers of premium motor spirit (PMS), also known as petrol.

In a statement on Sunday by Olufemi Soneye, the company’s chief corporate communications officer, NNPC said it is facing financial strain due to the petrol supply costs, and this is affecting the company’s ability to sustain PMS supply.

Earlier today, some Nigerian newspapers reported that the lingering petrol scarcity in many parts of the country has been worsened by a $6 billion debt NNPC owes suppliers.

There have been reports of petrol scarcity since May, with the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) blaming it on contractual issues between mother and daughter vessels.

In July, NNPC faulted flooding and weather concerns, as well as a hitch in the discharge operations of a couple of vessels for the lingering petrol scarcity.

While admitting to the debt on Sunday, NNPC said the financial strain threatens the supply of petrol.

“NNPC Ltd. has acknowledged recent reports in national newspapers regarding the company’s significant debt to petrol suppliers,” the company said.

“This financial strain has placed considerable pressure on the Company and poses a threat to the sustainability of fuel supply.

“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.”

On August 26, Heineken Lokpobiri, minister of state for petroleum resources, (oil), said NNPC was selling petrol below the landing cost.

He said this is fueling petrol smuggling to neighbouring.

Also, on August 20, Umar Ajiya, the chief financial officer (CFO) of the NNPC, said the company was selling petrol at only half the land cost.

The official pump price of petrol is about N600/litre but the landing cost is around N1,200.

According to Ajiya, it cost the NNPC N7.8 trillion to subsidise PMS from January to July.

NNPC had initially denied subsidising petrol after TheCable reported on August 19 that President Bola Tinubu approved a request by the company to utilise the 2023 final dividends due to the federation to pay for the petrol subsidy.

In a report by Agora Policy, an Abuja-based think tank, on August 22, petrol subsidy rose to N1.16 trillion in 2021, N2.91 trillion in 2022, and N5.10 trillion in 2023, while it stood at N4.2 trillion in the first seven months of this year.