• Sunday, June 23, 2024
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BusinessDay

NNPC owes oil traders $3bn backlog for petrol subsidy

The Nigerian National Petroleum Company (NNPC) Limited has been reported to owe around $3 billion to oil traders for imported petrol.

Five sources close to the matter revealed to Reuters that the national oil company is, however, clearing the overdue payments for the imported oil, although the pace of repayment has been relatively slow.

“They are paying, but it’s slow,” one of the sources with knowledge of the matter said. “NNPC was taking more than 130 days to make the payments instead of within 90 days.”

The slow pace of payments indicates that fuel subsidies, which were discontinued in May 2023, will take time to recover, depleting the NNPC’s import budget.

In addition, it was reported that rising global oil prices and a falling naira are limiting NNPC’s import capabilities.

The price of crude oil has risen beyond $90 per barrel, significantly increasing the NNPCL’s costs when importing petrol into the country.

In addition, data obtained from Argus Media pricing data revealed that the highest recorded market price for petrol in West Africa in February was N1,229 per litre, which is 150 percent higher than the government’s June price cap.

Prices have dropped to around N912 per litre, but they remain N295 higher than the capped price of N617.

Meanwhile, despite the global rise in Brent Crude oil prices, the state-owned company has consistently refused to pay subsidies on imported gasoline.

Mele Kyari, Group CEO of NNPC Limited, stated in October 2023 that no subsidies were paid to oil traders.

According to him, the oil company only recovers the full cost of the products that it imports.

“I told you there’s no subsidy whatsoever, we are recovering our full cost from the products that we import. We sell to the market; we understand why the marketers are unable to import.

“We hope that they do this very quickly and these are some of the interventions the government is doing. There is no subsidy,” Kyari said.