Industry experts have revealed that the Nigeria National Petroleum Company Limited (NNPCL) is preparing to announce a price increase for petrol. The disclosure follows a statement from NNPCL on Sunday, which attributed the current fuel scarcity in the country to financial strain.
The statement, titled ‘NNPC Ltd Faces Financial Strain Due to PMS Supply Costs, Impacting Supply Sustainability,’ admitted that financial difficulties have significantly burdened the company, posing a threat to the sustainability of fuel supply. The NNPCL acknowledged the considerable debt it owes to petrol suppliers and the resulting pressure on its operations.
“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,” said the statement, signed by Chief Corporate Communications Officer Olufemi Soney.
The statement emphasized NNPCL’s commitment to its role as the supplier of last resort, in accordance with the Petroleum Industry Act (PIA). The company assured that it is working with relevant government agencies and stakeholders to maintain a steady supply of petroleum products nationwide.
In an interview with Daily Trust, Tunji Oyebanji, CEO of 11 Plc (formerly Mobil Nigeria), criticized NNPCL for its previous denials regarding the financial strain. Oyebanji argued that selling petrol below the cost of supply is unsustainable. He suggested that adjusting the price to reflect economic realities might improve supply and alleviate financial pressure on NNPCL.
“Selling below the cost, whether from import or local refineries, is not sustainable. If they sell at an economic price, perhaps others can import, supply will improve, and the financial strain will not be on them alone. It’s either that or these supply disruptions will continue indefinitely. I am baffled why they have not been upfront about this since instead of denials,” Oyebanji stated.
An anonymous independent marketer also highlighted that a rise in petrol prices is expected due to low crude oil output. The marketer noted that in a fully deregulated market, such price increases are inevitable.
“It was almost inevitable for the pump price to 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,” the marketer said.