NNPC’s Debt Admission Worsens Fuel Scarcity

The Nigerian National Petroleum Corporation Limited (NNPC) has admitted to significant debts owed to international oil traders, exacerbating fuel scarcity across Nigeria and leading to longer queues at filling stations.

On Sunday, the NNPC revealed that financial strain, attributed to a debt of approximately $6 billion, is impacting its ability to consistently supply petrol.

This admission follows weeks of denial regarding the extent of its financial obligations, which have reportedly hampered the procurement of imported fuel products.

Major cities like Lagos, Abuja and other parts of the country are experiencing severe fuel shortages, with prices at some stations reaching as high as N1,200 per litre.

NNPC spokesperson Olufemi Soneye emphasized the company’s commitment to maintaining energy security while hinting at potential government intervention to alleviate its financial burdens.
Speculation about a possible increase in fuel prices has arisen, as the NNPC may no longer be able to sustain the current pricing structure without government support. The ongoing crisis has also bolstered black market activities, further complicating the fuel supply landscape.

In Abuja, the situation worsened on Monday, leaving drivers frustrated and stranded despite assurances from authorities. Observers reported long queues at mostly NNPC filling stations, while those owned by marketers were closed, leading to a thriving black market for desperate motorists.

Passengers in Lagos and Ogun states were stranded as vehicles queued at filling stations. Due to scarcity and price hikes, transporters have inflated fares by about 50 to 70 per cent.

LEADERSHIP correspondents observed long queues at filling stations in Lagos and Ogun, with prices ranging from N568 to N700 per litre, and fewer queues at stations selling between N750 and N950.
Transporters have raised fares by 50 to 70 per cent, citing scarcity and price increases. Queues at filling stations along major roads led to traffic congestion throughout the metropolis, and market observers expect the situation to persist for the remainder of the week.

An anonymous staff member of an e-hiring service expressed concern about the impact of fuel scarcity on operations, citing a driver who had been waiting in line at the MRS fuel station in Victoria Island since 8 a.m. but had not reached the pump by 4 p.m.

A commuter, Abiola Olatunde, expressed frustration over a fare increase from Ikeja to Ogba, questioning why the fare had risen from N200 to N300.

Njoku Agbakansi lamented that N3,000 worth of fuel, which used to last a day, now requires a budget of N15,000 per week, depending on travel distance. She urged the government to resolve the issues in the petroleum sector or step aside, emphasizing the widespread impact of fuel prices on daily expenses.
Henry Okeke, a motorist from Gbagada, Lagos, expressed his dismay at the unreliability of the fuel supply system. He recounted a lengthy wait to secure fuel for a journey to Epe and questioned whether this was the standard Nigerians should accept.

Osagie Moses, a motorist travelling from Ikeja to Iyana-Ipaja, criticized the stress and high fuel prices, stating that the transport fare remains within N300/N400 per trip despite rising costs.

Akin Joshua described buying fuel at Egbeda for N950 per litre, noting that passengers are complaining and seeking cheaper fares, which is impacting transporters who face high costs at filling stations.

Another motorist highlighted the impact of fuel scarcity on everyone, urging the government to prioritise reducing fuel prices to lower transportation costs. He argued that a decrease in fuel prices would lead to lower costs for goods, benefiting businesses and consumers alike.

Economist Professor Tayo Bello condemned the hardship caused by fuel scarcity and price hikes, urging the government to address the issue before it becomes a national disaster. He blamed the situation on President Bola Tinubu’s abrupt subsidy removal announcement without proper planning to mitigate public suffering.

Remove Subsidy, Make Refineries Work To Address NNPC’s Financial Woes, CPPE Urges

The federal government has been urged to ensure that the country’s refineries, including the Dangote Refinery, become operational and to promote cheaper energy alternatives to address NNPC’s financial troubles and the ongoing fuel scarcity.
Reacting to NNPC’s financial struggles, chief executive of the Centre for Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, suggested that the government may need to consider partially removing fuel subsidy.

He noted that with a landing cost of around N1,200 per litre, an outright removal may be impractical given current economic conditions.

“A further partial removal of the subsidy may be necessary because, at the current rate of N610 to N650, it will be difficult for NNPC to supply petroleum products in the short term. They may need to review the pump price a bit, but not remove it entirely, as citizens cannot afford to pay N1,000 per litre at this time,” Yusuf said.

He acknowledged the challenge and the need for a partial subsidy removal to relieve financial pressure on the government and NNPC. He suggested that NNPC stations should continue to sell at the present price to maintain a social pricing window for vulnerable segments of society.

Yusuf expressed concern about NNPC’s previous reluctance to admit its financial issues, leading to recurring deficits and exacerbated social tension. He emphasized the need for increased efforts to find domestic petroleum products by supporting refineries and transitioning to alternative energy sources like CNG.

The government should expedite the deployment of CNG for vehicles and generators, remove taxes and bureaucratic barriers to renewable energy, and facilitate people’s and businesses’ transition to cost-effective solutions.

A Labour union official who asked not to be named said, “Don’t waste your time on it because it is a very sensitive issue that many will not like to talk about.”

“It is a very volatile and dangerous issue that may not fly for now. Jumping the gun will be seen as a violation, and since it is dangerous terrain, we should be careful not to be seen as the enemy.

“You can imagine NNPC leader Kyari: things are going up and down, yet the government of the day still retains him there despite the numerous controversial figures being quoted. A few days back, they came out with one figure, and a few hours later, they said NNPC is owing marketers. Who is deceiving who? We pray that things will work during our lifetime.

“Let us watch how things will unfold before we can talk about it,” he said.