Nigeria could avert more fuel scarcity by paying subsidy arrears

The Petroleum Products Pricing and Regulatory Agency (PPPRA), an agency of Nigeria’s petroleum ministry, has selected 29 fuel marketers to import 1.6 million tonnes of gasoline for the third quarter (Q3) consumption needs of the country.

This translates to 2.1 billion litres of petrol and represents a daily supply of 23.6 million litres. This level of consumption is expected to be augmented by a further 9.5 million litres of supply from the national refineries, which are to commence operations from August. Thus, there could be shortage of about 7 million litres of gasoline compared to the country’s average daily consumption of at least 40 million litres.

Furthermore, as the banks are hesitant to give new loans for fuel imports due to outstanding
loan balances owed by the fuel importers, some of the importers are unlikely to secure adequate funding to support fuel imports. ‘This is expected to further reduce imported volumes, while continued smuggling of gasoline over the borders into neighbouring countries could reduce volumes available for domestic consumption,’ said an industry analyst in Lagos.

He added that a scarcity could be averted if product diversion is reduced and the refineries are able to ramp up capacity utilisation. ‘More importantly, payment of the subsidies owed to fuel marketers, could enable fuel marketers clear up debts at their banks and receive new loans to finance more imports,’ he said

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