The Nigerian National Petroleum Company Limited (NNPCL) hinted at an increase in the price of petrol after it admitted it is facing financial strain to run its operation and pay it’s indebtedness to petrol suppliers.
Officials of the company are worried that fluctuating exchange rate of the Naira against the dollar has made it impossible to sustain the current official price of N617 per litre for petrol.
Already, the product is being sold at N800, N900 and N1,000 per litre at many filling stations, adding to the existing tough economic situation Nigerians are facing.
According to the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, in a draft report of the Accelerated Stabilisation and Advancement Plan (ASAP) presented to Tinubu, revealed that the estimated expenditure on fuel subsidy for 2024 was N5.4 trillion, which is about N1.8 trillion higher than the amount spent in 2023.
The NNPCL, has admitted that it’s indebted to suppliers of petroleum product is huge surpassing $6 billion and has no money to cover and settle the debt.
In a statement issued by the NNPCL’s Chief Corporate Communications Officer, Olufemi Soneye, it noted that the financial strain had placed the company in tight corner with no option but to increase the official price of petrol to raise more money.
“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”.
It is recalled that the NNPCL had informed the Federation Account Allocation Committee (FAAC) that it has deficit of N4.56 trillion for selling petrol at a subsidised price between August 2023 and June 2024.
While reacting to the expected increase in the price of petrol, marketers blamed the rising cost on the landing cost of petrol which they said necessitated increase by filling stations.
“It was almost inevitable for the pump price to not rise, as this is one of the outcomes of a fully deregulated market.
“The NNPCL remains the main importer, with private importation remaining limited. This situation is worsened by Nigeria’s declining crude oil output, which impacts the country’s capacity to import refined products. The Organisation of Petroleum Exporting Countries (OPEC) has noted the dwindling output of many nations, including Nigeria,” said an independent oil marketer.
Likewise, a former chairman of the Independent Petroleum Marketers Association of Nigeria (IPMAN), Ejigbo Depot in Lagos, Mr Akin Akinade also said: “Our members have no direct supply from NNPC. We buy from third party. We buy at DAPMAN Depot in Abule Ado.
“They sell to us N840, N850, and by the time you add transportation to that, there is no way our members would sell less than they are selling. If they bring down their price, we are also going to bring down our price. We are in business to make money”, he said.