NNPC Faces $6bn Petrol Payment Backlog, Fuel Queues Return

Long queues are making a comeback at petrol stations across Nigeria, Africa’s largest economy, as the Nigerian National Petroleum Company Ltd (NNPCL) struggles with a massive $6 billion petrol payment backlog. This development has sparked fresh concerns about potential fuel shortages.

According to BusinessDay, NNPCL owes around $6 billion to international traders for imported petrol. The state-owned company has been delaying payments beyond the standard 90-day period. Reports indicate that debts amounting to $4 billion-$5 billion for January imports remain unpaid, causing several international suppliers to withdraw from recent tenders.

“The only reason traders are putting up with it is the $250,000 a month (per cargo) for late payment compensation,” an industry source told Reuters.

These delays highlight a potential resurgence of fuel subsidies, which were abolished in May 2023. Such subsidies drain NNPCL’s cash reserves, limiting its ability to finance imports and affecting its contributions to President Bola Tinubu’s government.

At least two suppliers have already ceased participating in recent tenders due to hitting their debt exposure limits with Nigeria, meaning they will not supply more gasoline until payments are made.

NNPC’s suppliers, including international traders like Vitol, Mercuria, and Gunvor, as well as Nigeria-based trading houses, have declined to comment publicly on the situation.

BusinessDay’s investigation revealed that while traders are accustomed to operating in risky environments, they impose strict credit limits to manage their exposure. These limits, which vary by company, are designed to prevent excessive risk concentration with a single borrower.

Consequently, Nigeria’s petrol tenders for June and July were notably smaller. NNPC will import about 850,000 tonnes in July, down from the usual 1 million tonnes in previous months, according to two sources.

As a result, long queues and petrol scarcity have reappeared in major cities like Lagos and Abuja, posing significant challenges for Nigerians.