Reports from Reuters indicate that the Nigerian National Petroleum Corporation (NNPC) is experiencing delays in payments to fuel suppliers, attributed to the depreciation of the naira currency and the recent surge in global fuel prices.
This delay in payments represents a setback to Nigeria’s efforts to stabilize its economy by reducing costly energy subsidies, as the government seeks to address financial strains in Africa’s largest economy.
Sources familiar with the situation disclosed that NNPC, Nigeria’s primary petrol importer, is now taking more than 130 days to settle payments, compared to the usual timeframe of 90 days. Despite this, an NNPC spokesperson stated that the company is unaware of any significant outstanding debts or financial issues.
The spokesperson reaffirmed NNPC’s commitment to ensuring adequate petroleum product supply across Nigeria, despite challenges in payment processing.
NNPC’s suppliers, including international trading firms like Vitol, Mercuria, and Gunvor, continue to supply fuel despite the payment delays. However, both NNPC and the trading firms declined to provide official comments on the matter.
The payment delays reflect a gradual return to fuel subsidies, which were abolished in May 2023. These subsidies, aimed at keeping pump prices low, strain NNPC’s finances for imports and limit resources available for government initiatives under President Bola Tinubu.
Nigeria’s decision to remove fuel subsidies was part of broader reforms, resulting in a significant increase in petrol prices. Consequently, fuel consumption decreased by approximately 30%, as higher prices reduced smuggling to neighboring countries.
Nigeria’s reliance on fuel imports stems from years of mismanagement and underinvestment in state-owned oil refineries, exacerbating challenges in the country’s oil industry.
