Fuel Scarcity: NNPCL, Marketers Pass The Buck As Queues Spread

The Nigerian National Petroleum Company Limited (NNPCL) and oil marketers are shifting blame on the actual cause of the current spate of petrol supply shortages in the country.

This is as the long fuel queues that resurfaced in Abuja since last Wednesday have spread to Lagos and other states, causing untold hardship for motorists and commuters.

The scarcity of Premium Motor Spirit (PMS), commonly known as petrol, has intensified in Abuja, Lagos, and other states, with many filling stations either closed or experiencing long queues

While the NNPCL said that the fuel queues seen in the Federal Capital Territory and some parts of the country were a result of disruption of ship-to-ship transfer of PMS between Mother Vessels and Daughter Vessels resulting from a recent thunderstorm, marketers have maintained that they are unable to access the NNPCL portal to place an order for the commodity.

The national oil company said the adverse weather condition had also affected berthing at jetties, truck load-outs and transportation of products to filling stations, causing a disruption in station supply logistics.

In a statement signed the chief corporate communications officer of NNPC Ltd, Olufemi Soneye, the company explained that due to the flammability of petroleum products, and to comply with the Nigerian Meteorological Agency’s (NIMET’s) regulations, it was impossible to load petrol during rainstorms and lightning.

“Adherence to these regulations is mandatory as any deviation could pose severe danger to the trucks, filling stations and human lives,” it said.

Similarly, the development was compounded by consequential flooding of truck routes which has constrained the movement of PMS from the coastal corridors to the federal capital, Abuja.

“The NNPC Ltd is working with relevant stakeholders to resolve the logistics challenges and restore seamless supply of petrol to affected areas.

“Already, loading has commenced in areas where these challenges have subsided, and we are hoping the situation will continue to improve in the coming days and full normalcy will be restored.

“The NNPC also calls on motorists to avoid panic buying and hoarding of petroleum products,” the oil company added.

Some marketers confirmed to our correspondent that there was already a supply glitch at the moment.

A report says Nigeria is facing challenges over debt to suppliers which is reported to have surpassed $6 billion, doubling since April.

The NNPCL is currently struggling to cover the gap between fixed pump prices and international fuel costs, six industry sources said.

The treasurer, Board of Trustees,  Independent Petroleum Marketers Association of Nigeria (IPMAN), Elder Chinedu Okoronkwo, said rationing of products has been observed in the last few days.

The situation was further compounded by the shutdown of the NNPCL portal through which marketers place orders and make payments.

The national president of the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN), Dr Billy Gillis-Harry, confirmed the platform shutdown but said the NNPCL claimed it was being upgraded.

Dr Billy Gillis-Harry said it would be a matter of urgency for the company to consider any other emergency measures to ensure products are available to marketers.

With the portal now down, he said, marketers cannot procure products and this would further create another round of bottlenecks.

Some retailers who spoke on the matter said the shutting of the portal implies there are many products available and the company is applying the measure to avert panic when marketers place orders without receiving products.

“The portal shutdown is affirmation of the unavailability of products, but the NNPCL should be strategic enough to build a buffer to keep supply going in the case of this sort of issue “ a marketer said.

But the NNPC said this is not true.

The NNPC has made spirited efforts to regain the confidence of international petroleum products suppliers after some of them backed down following a report of debt overhang of over $6 billion.

LEADERSHIP’s findings showed that the company, in a measure to sustain importation, made a payment of N200 billion in order to resume importation.

An impeccable industry source who confirmed the payment, however, said the current negotiation to persuade suppliers to resume operations may lead to some delays in product procurement which has led to current rationing of products in the country.

Beside President Bola Tinubu ending petrol subsidy last year, allowing pump prices to triple, the NNPCL also capped pump prices shortly afterward as citizens sweated under rising cost of living.

The cap, coupled with a Naira currency crash, allowed the subsidy to creep back, with government expecting the subsidy to cost at least $3.7 billion this year.

Analysts, NGOs and even government officials have slammed the subsidy for years as wasteful and corrupt, but Nigerians, who get few government services, have long seen cheap fuel as their right, especially in the current cost-of-living crisis.

The NNPC began struggling early this year when late petrol payments surpassed $3 billion.

The company has still not paid for some January imports, traders said, and the late payments amount to $4 billion to $5 billion, and under contract terms, NNPCL is meant to pay within 90 days of delivery.

The NNPC declined to comment, said Reuters.

“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.

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.

Traders thrive in risky environments, but they place limits on how much credit they allocate per trade in order to avoid too much exposure on one borrower. These limits vary by company based on their size and where they operate.

As a result, Nigeria’s tenders to buy petrol in June and July were smaller, traders said.

The NNPCL will import via tender about 850,000 tonnes in July, two of the sources said, down from the typical one million tonnes in previous months.

Fresh fuel queues have already started to form in Lagos and Abuja this week, and some Abuja stations stopped selling PMS.

Nigeria imports virtually all its fuel due to years of neglect at its state-owned oil refineries.

The newly opened 650,000 barrel-per-day Dangote refinery has not yet produced marketable petrol, and is selling other fuels abroad.

The country has few savings to fall back upon as corruption and wasteful spending have eaten up decades of oil revenues.

The NNPCL has also mortgaged much of its spot oil cargoes, limiting what it can sell for cash.

In late 2023, NNPCL secured its biggest-ever oil-backed loan worth $3.3 billion from AfreximBank and a consortium of traders to shore up the country’s foreign exchange.