Oil giant Nigeria National Petroleum Company Limited (NNPCL) yesterday admitted that its financial strain may affect the sustainability of petrol supply.
Its admittance came on the heels of reports that it is indebted to suppliers to the tune of about $6 billion.
According to the reports, supply agents have been reluctant to make the product available.
The development has forced the oil giant to resort to stock rationing and to prevail on major suppliers not to cut off supply.
No fewer than five vessels meant for Nigeria have refused to discharge fuel to NNPCL due to fear of non-payment, one of the major suppliers said at the weekend.
It was learnt that the $300 million bailout by the Federal Government was not enough for the company to sustain petrol supply nationwide.
Only a few filling stations had the product to dispense to end-users yesterday, forcing desperate motorists to queue for hours in Lagos, Abuja and other cities.
Independent marketers took advantage of the situation to sell a litre of petrol for as high as N950 in some parts of Lagos. It sold for more in other states.
There were indications that the Federal Government was weighing options.
The NNPCL admitted the financial strain in a statement by its Chief Corporate Communications Officer, Olufemi Soneye.
“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.
“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,” Soneye said.
A source told The Nation that the government had shown concern.
“The Federal Government is already weighing options because of the security implications of acute shortage of petrol in the country.”
On Saturday, Soneye said in the oil trading business, transactions often operate on credit with intermittent outstanding balances, saying there was nothing extraordinary in the outstanding financial liabilities.
He was reacting to reports by Reuters that the uncertainty over the payment of the $6 billion has made most suppliers “hesitant” in bringing in products.
The 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 NNPCL, using supply agents, has been the sole importer of petrol.
The NNPCL is “struggling to supply dealers due to shortage of product at its tanks”, a source confirmed at the weekend.
The source said: “Bulk sales of ships and trucks to depot owners have slowed down in the last five days due to a shortage of supply.
“No bulk sales had happened since Tuesday, which heightened the scarcity in the downstream sector.”
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 the 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 the confidence of the suppliers to continue.
“However, what was paid was about $300 million which only helped in getting a reprieve for about a week before the queues fully returned,” he said.
Another source said: “Suppliers of petrol are hesitant about supplying new products 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 NNPCL 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.”
Reuters said: “Nigeria’s debt to gasoline suppliers has surpassed $6billion – doubling since early April – as state oil firm NNPCL struggles to cover the gap between fixed pump prices and international fuel costs, under rising cost of living.”