NNPC Admits Mounting Debt, Warns Of Threat To Fuel Supply Amid $6 Billion Shortfall

…Says Remains Dedicated To Its Role As Supplier of Last Resort

By Olushola Okunlade

The Nigerian National Petroleum Company Limited (NNPC Ltd.) has raised alarms over its worsening financial situation, which could jeopardize the continued supply of petrol nationwide.

The company recently confirmed that it faces a significant debt burden to petrol suppliers, reportedly amounting to $6 billion.

This debt has exacerbated the ongoing petrol scarcity in the country, which has persisted since early 2024.

NNPC Ltd’s Chief Corporate Communications Officer, Olufemi Soneye, issued a statement on September 1, 2024, highlighting the gravity of the situation.

He noted that the company’s financial strain is placing considerable pressure on its operations and poses a real threat to the sustainability of fuel supply across Nigeria.

Despite these challenges, Soneye affirms that the NNPC Ltd remains committed to fulfilling its role as the supplier of last resort, as mandated by the Petroleum Industry Act (PIA).

The company is actively working with government agencies and other stakeholders to ensure a steady supply of petroleum products nationwide.

Nigeria, a country heavily dependent on imported refined petroleum products, faces significant energy challenges, compounded by the non-operational state-owned refineries.

The removal of fuel subsidies in May 2023 by President Bola Tinubu on his inauguration day led to a sharp increase in petrol prices, which have since tripled from around ₦200 per litre to approximately ₦800 per litre.

This has added to the financial burden on citizens, who rely on petrol to power vehicles and generators due to the country’s unreliable electricity supply.

The situation has been further complicated by the depreciation of the naira, following the unification of forex windows.

The exchange rate has also plummeted from $1/₦700 to over $1/₦1600 in the parallel market, driving inflation and pushing the prices of food and basic commodities to unprecedented levels.

In response to the crisis, the Independent Petroleum Marketers Association of Nigeria (IPMAN) has expressed concerns about the rising landing cost of petrol, which has made it nearly impossible for independent marketers to import the fuel.

According to IPMAN, the landing cost of petrol has surged to over ₦1,200 per litre, far exceeding the price at which NNPC Ltd sells to marketers, which hovers around ₦565 per litre.

This disparity suggests a significant under-recovery, effectively acting as a hidden subsidy.

Adding to the complexity, Africa’s leading industrialist, Aliko Dangote, began operations at his $20 billion refinery in Lagos last December.

The facility, which aims to reach its full capacity of 650,000 barrels per day by the end of the year, has already started supplying diesel and aviation fuel.

Petrol production is expected to commence soon, offering some hope for alleviating the country’s fuel supply challenges.

However, the ongoing financial strain on NNPC Ltd continues to cast a shadow over the stability of Nigeria’s fuel supply, raising concerns about the potential long-term impacts on the nation’s energy security.