Nigeria reportedly owes suppliers of Premium Motor Spirit (PMA) commonly called petrol, over $6 billion, doubling since early April.
A report on Thursday, revealed that the development came as the Nigerian National Petroleum Company (NNPC) Limited strived to cover the gap between fixed pump prices and international fuel costs.
It noted that the NNPC started struggling early this year when late petrol payments were over $3 billion.
Disclosed the report: “The company has still not paid for some January imports, traders said, and the late payments amount to $4 billion to $5 billion”.
Under contract terms, the report said, the NNPC was obligated to pay within 90 days of delivery.
Divulged an industry source: “The only reason traders are putting up with it is the $250,000 a month (per cargo) for late payment compensation”.
Sources further disclosed that at least two suppliers had already withdrawn from current tenders after reaching their self-imposed debt exposure restrictions to Nigeria.
What it means is that they will not provide any more petrol unless they are paid, the report added.
Said the report: “Traders thrive in risky environments, but they place limits on how much credit they allocate per trade in order to avoid too much exposure on one borrower. These limits vary by company based on their size and where they operate”.
Nigeria’s tenders to buy petrol in June and July were consequently smaller, traders said.
Two sources said the NNPC would import about 850,000 tonnes in July via tender — down from the typical 1 million tonnes in previous months.
President Bola Ahmed Tinubu had announced the removal of the petrol subsidy when he took over in May last year, saying “its ever-increasing costs” could no longer be justified “in the wake of drying resources”.
Prior to the removal, the Federal Government had said it would spend up to N3.3 trillion on petrol subsidy between January and June 2023.
Petrol subsidy has remained a controversial issue in Nigeria as spending continues to deplete the country’s revenue. But the removal has since worsened the living conditions of Nigerians as petrol prices, coupled with a weak currency have stoked inflation to unbearable levels.
The Federal Government has dismissed claims on many occasions that subsidy has been reintroduced partially amid speculations that it is the case.