Nigeria's state-owned oil company (NNPC) reportedly has outstanding debts of about $3 billion to fuel traders for imported petrol.
- Nigeria's state-owned oil company (NNPC) reportedly has outstanding debts of about $3 billion to fuel traders for imported petrol.
- The backlog in payments represents a setback to the government's initiatives in Africa's largest economy to stabilize its strained finances by reducing expensive energy subsidies.
- NNPC spokesperson said the company was "not aware of any such debt nor any financial issues of such magnitude".
Sources close to the matter told Reuters this situation has arisen due to the depreciation of the naira currency and the spike of global fuel prices, increasing the subsidy being paid by NNPC.
The backlog in payments represents a setback to the government's initiatives in Africa's largest economy to stabilize its strained finances by reducing expensive energy subsidies.
They are paying, but it's slow," one of the sources with knowledge of the matter said. Five sources revealed that NNPC, the primary importer of petrol in the country, is taking over 130 days to complete payments instead of the usual timeframe of 90 days.
However, 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.
NNPC's suppliers, which include international traders like Vitol, Mercuria, and Gunvor, as well as Nigeria-based trading houses, are still supplying fuel, according to the sources.
They declined to be named because they are not authorised to speak to the media. The trading firms also declined to comment.
The delays in payments show the gradual resurgence of fuel subsidies, which were abolished in May 2023.
These subsidies strain NNPC's finances for imports and limit the resources it can allocate to President Bola Tinubu's government.
Nigeria had subsidised fuel for years to keep pump prices affordable, but Tinubu removed them as part of wider reforms, allowing prices to triple. Petrol consumption fell by around 30% as higher prices curbed smuggling to neighbouring countries.
Nigeria's heavy dependence on fuel imports stems from years of mismanagement and underinvestment in state-owned oil refineries.
