THE Nigerian National Petroleum Company Limited (NNPCL) is set to enforce a price hike of N1000 per litre of premium motor spirit (PMS) as directed by the Minister of State for Petroleum Resources, Heineken Lokpobiri, having admitted financial strain impacts on supply costs.
As a result of this development, the lingering fuel queues in major cities across the country could persist as most Nigerians make last-ditch efforts to make purchases at the NNPCL retail outlets, which sell at a lower rate when compared to others.
The NNPCL retail outlets sell at a subsidised rate of N617/litre in Nigeria’s capital Abuja with long queues, however, many private retail outlets sell above N700 per litre, with some selling almost N1,000.
The chief corporate communications officer at NNPCL, Olufemi Soneye, in a statement on Sunday, September 1, said the financial strain would affect the long-term gasoline supply across the country.
“NNPC Ltd has acknowledged recent reports in national newspapers regarding the company’s significant debt to petrol suppliers. This financial strain has placed considerable pressure on the Company and poses a threat to the sustainability of fuel supply.
“In line with the Petroleum Industry Act (PIA), NNPC Ltd remains dedicated to its role as the supplier of last resort, ensuring national energy security. We are actively collaborating with relevant government agencies and other stakeholders to maintain a consistent supply of petroleum products nationwide, “Soneye added.
The latest NNPCL financials as earlier reported by the ICIR revealed that contract liabilities for crude oil supply to foreign creditors currently rose to N3.89 trillion amid the struggles by domestic refineries to access feedstock.
The contract liabilities surged by 34.44 per cent compared to N2.89 trillion it was in December 2022.
Further analysis of the financial statements by The ICIR shows that the contract obligation arose from forward sale agreements, the sale of natural gas, and other contract liabilities.
The report indicated that forward sale agreements stood at N3.37 trillion, the sale of natural gas at N17.30 billion, and other contract liabilities at N498.32 billion.
It further reveals that N3.24 trillion represents non-current contract liabilities and N648.61 billion current contract liabilities.
So much of Nigeria’s resources have been wasted under elaborate turnaround maintenance for refineries that are still moribund with several shifting of the goal post for the Port Harcourt Refinery, which recently gulped $ 1.5 billion for its rehabilitation.
“Nigerian government needs to come out and speak more since the NNPC-the national oil company had admitted financial distress in fuel supply costs, which is technically telling us that the price will rise to about N1,000 or even N1,200. The NNPCL magic of selling below the landing cost of above N1,000 officially ends,” founder of Leadership by Data, Babajide Ogunsowo said.
Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.