Fuel Scarcity Increased

New facts emerged, yesterday, indicating that a combination of policies from Nigeria’s Central Bank and the high level of indebtedness of product marketers to some banks led to the low supply of Premium Motor Spirit PMS (petrol).

Because of the high level of indebtedness of marketers to banks, most of the banks have refused to issue Letters of Credit to them. A competent source at the Petroleum Products Pricing Regulatory Agency, PPPRA, disclosed that “the National Consumption level is predicated at 40 million litres daily and this is shared at ratio 50:50 between NNPC and other petroleum products marketers.

“Against the foregoing, available record shows that at the moment, NNPC is meeting its allocated ratio while other marketers have blatantly refused to contribute a drop of their own quota”.

The Federal Government, in a bid to arrest the situation is now seeking ways and means to pay off about N100 billion accruing from foreign exchange differentials and bank interest charges from fuel imports.

The move followed refusal by banks to extend any further credit to oil marketers until a substantial part of the N264 billion, including the foreign exchange differentials and interest charges have been paid.

The N264 billion is the total invoice so far submitted to government by oil marketers for subsidy reimbursement as at January end. The amount is largely sourced from the banks, a development that worried the Central Bank of Nigeria, CBN, which directed banks to rein in their exposures to the energy sector — oil, gas, and power to avoid another round of distress in the system.

The figure is still rising as government is also meant to reimburse them about N6.5 billion more, representing the N10/litre shortfall suffered by the marketers from existing stock on account of reduction in the pump price for PMS from N97 to N87/litre on January 19.

Stock level so far in all the depots exclusively obtained by Vanguard from Calabar, Warri, Lagos and Port Harcourt zones excluding Ejigbo, was put in excess of 6.49billion litres, and will rise more once all the figures have been collated.

The stock mostly belongs to the Nigerian National Petroleum Corporation and Pipelines and Products Marketing Company, NNPC/PPMC — 123,777,613.50 litres; Independents – 459,264,602.50; and Majors – 66,211,473.00.

Against this backdrop, Minister of Finance, Dr. Ngozi Okonjo-Iweala, met with the Central Bank of Nigeria, CBN, and bank chiefs last week in Lagos, to plead with them to continue to support the oil marketers to enable them bring in more products, since the nation’s refineries cannot rise to the challenge of meeting domestic demand.

However, a party to the meeting confided in Vanguard that “the body language of the banks did not show that they wanted to do anything until government acted.”

Accordingly, government is being forced to pay off N100 billion out of the N264 billion owed marketers as quickly as possible to enable them bring in more products, which it promised to offset up till the end of March.