Stakeholders Lament Inactive Refineries as Fuel Imports Gulp N843bn
The Nigerian National Petroleum Company Limited (NNPCL) may be spending about N843bn monthly on the importation of Premium Motor Spirit, popularly called petrol, following the halt in oil swaps by the firm, findings showed on Sunday.
NNPCL, the sole importer of petrol into Nigeria, has started buying petrol using cash tenders, rather than oil swaps, Reuters reported on Saturday.
In the swap arrangement, known as Direct Sale, Direct Purchase, which had been in place for nearly a decade, the national oil firm sells crude to refiners, who will in turn supply NNPCL with an equivalent worth of refined petroleum products.
In July, data from the Nigerian Midstream and Downstream Petroleum Regulatory Authority showed that between June 1 and June 28, 2023, which was described as the post-deregulation period, the total petrol consumption across the country was 1.36 billion litres, while the average daily consumption was put at 48.43 million litres.
Oil marketers said the average ex-depot price of petrol from the only importer of the commodity was N580/litre. NNPCL is the sole PMS importer currently. Other marketers stopped importing the product due to their inability to access foreign exchange, among others.
With the average daily consumption of petrol at 48.43 million litres and an average ex-depot price of N580/litre, the national oil company would spend N28.1bn daily on PMS imports.
In 30 days, the cost of importing the commodity is going to be about N843bn, going by the fact that NNPCL now pays cash for PMS imports.
Sources told Reuters that the national company’s latest tender to buy petrol for delivery in November closed last week.
Two of the sources, according to the report, said NNPCL would pay the last debts owed under the oil swaps by the end of next month.
The shift occurred four months after President Bola Tinubu commenced reforms to eliminate the costly subsidies on petrol, which depleted the country’s finances massively.
On June 4, 2023, NNPCL said it had commenced the termination of crude oil swap contracts, hinting at payment of cash for petrol imports.
“In the last four months, we practically terminated all Direct Sale Direct Purchase contracts. And we now have an arm’s-length process where we can pay cash for the imports,” the Group Chief Executive Officer, NNPCL, Mele Kyari, had said.
Nigeria reportedly owes about $3bn to trading houses and oil majors for crude oil swap arrangements.
The continued importation of petrol into Nigeria was condemned by operators in the downstream oil sector on Sunday, as they wondered why the Federal Government had still been unable to fix Nigeria’s refineries.
