The Nigerian National Petroleum Company Limited (NNPCL) has finally acknowledged its “significant debt to petrol suppliers,” warning that this financial burden threatens the sustainability of the nation’s fuel supply.
Reports indicate that the NNPCL’s $6 billion debt to petrol suppliers has exacerbated the persistent fuel shortages plaguing Nigeria since early 2024. Although the NNPCL previously attributed the supply disruptions to factors like logistical challenges and flooding, the company’s spokesperson, Olufemi Soneye, confirmed in a statement on Sunday that “this financial strain has placed considerable pressure on the company and poses a threat to the sustainability of fuel supply.”
Soneye emphasized that, in accordance with the Petroleum Industry Act (PIA), NNPCL remains committed to its role as the supplier of last resort, ensuring national energy security. He added that the company is working closely with government agencies and other stakeholders to maintain a steady supply of petroleum products across the country.
Nigeria, Africa’s most populous nation, continues to grapple with energy challenges, including the non-operational state of its government-owned refineries. As a result, the country is heavily dependent on imported refined petroleum products, with the state-run NNPCL serving as the primary importer.
Fuel shortages and long queues are common across Nigeria, where the price of petrol has tripled since the removal of subsidies in May 2023, rising from around ₦200 per litre to approximately ₦800 per litre. This price hike has compounded the hardships faced by citizens, who rely on petrol to power their vehicles and generators due to the country’s longstanding unreliable electricity supply.
In addition, the government’s recent unification of forex windows has led to a sharp decline in the value of the naira, from $1/₦700 to over $1/₦1600 on the parallel market. This devaluation has triggered a surge in the prices of food and basic commodities, intensifying inflationary pressures on Nigerians.
The Independent Petroleum Marketers Association of Nigeria (IPMAN) recently highlighted the challenges faced by petrol marketers, noting that the current landing cost per litre of petrol has made it financially unfeasible for them to import the commodity independently, as NNPCL does. Zarama Mustapha, IPMAN’s National Operations Controller, stated that the landing cost of Premium Motor Spirit (PMS) is currently over ₦1,200 per litre, excluding marketers’ margins, transportation, and other logistics. He pointed out that NNPCL sells to marketers at around ₦565 per litre, implying a subsidy of nearly ₦600 to ₦700 per litre. “Whether they (government officials) say there is a subsidy or not, the fact on the ground clearly shows there is some form of under-recovery,” Mustapha said.
Meanwhile, Aliko Dangote, Africa’s leading industrialist, launched operations at his $20 billion refinery in Lagos last December. The facility, which currently processes 350,000 barrels per day, aims to reach its full capacity of 650,000 barrels per day by the end of the year. Although the refinery has begun supplying diesel and aviation fuel to local marketers, petrol supply is expected to commence soon.