By Adedapo Adesanya
The Nigerian National Petroleum Company (NNPC) Limited owes oil marketers around $3 billion for imported petrol, Reuters quoted sources as saying in a report, as the tumbling Naira currency and rising global fuel prices have increased the effective subsidy it is paying.
The payment backlog is a blow to the government’s efforts in Nigeria to shore up its strained finances by curbing costly subsidies, which it continues to partially pay for despite an announcement of removal.
“They are paying, but it’s slow,” one of the sources with knowledge of the matter said to the news agency.
The Reuters report also said five sources said that NNPC, which is the country’s main importer of petrol, was taking more than 130 days to make the payments instead of within 90 days.
An NNPC spokesperson said the company was “not aware of any such debt nor any financial issues of such magnitude”.
“Our focus remains on sustaining sufficiency in the supply of petroleum products in Nigeria,” the spokesperson said according to the publication.
NNPC’s suppliers, including international traders like Vitol, Mercuria and Gunvor as well as Nigeria-based trading houses, are still supplying fuel, the sources said. They declined to be named because they are not authorised to speak to the media.
When he assumed office on May 29, 2023, as part of his first set of office duties, President Bola Tinubu announced the end to fuel subsidies saying provisions were not made for it beyond June 2023.
President Tinubu said Nigeria would be able to save over N1 trillion from the subsidy paid by NNPC which it would remit to the government’s pocket.
But the payment delays underscore the creeping return of fuel subsidies.
President Tinubu removed them as part of wider reforms, allowing prices to triple. Petrol consumption fell by around 30 per cent as higher prices curbed smuggling to neighbouring countries.
Market analysts believe that due to current global prices, the pump prices of petrol should sell as high as N1,000 per litre.