NNPC Admits Prolonged Fuel Scarcity Due to Financial Struggles

The Nigerian National Petroleum Corporation (NNPC) has admitted that the ongoing fuel scarcity is set to continue for an extended period due to significant financial difficulties. The state oil company revealed that it is heavily indebted and unable to pay its suppliers, leading to a drastic reduction in fuel supply.

Recent reports from Vanguard indicated that for several months, fuel suppliers have been cutting back on deliveries to NNPC due to unpaid debts. This reduction in supply has now halted completely, as suppliers refuse to resume deliveries until a substantial portion of the debt is cleared. This supply issue has caused the fuel scarcity to persist for over two months, despite NNPC previously attributing the problem to “logistics” challenges.

Two weeks ago, NNPC denied owing suppliers $6.8 billion, instead referring to the amount as “obligations.” However, the safe period for these “obligations” has now elapsed, turning them into fully recognized debts. This reversal has sparked skepticism among Nigerians, who suspect that NNPC might be preparing to increase fuel prices from the current ₦600 per liter. The corporation’s earlier claims of profitability and debt-free status have now been called into question, fueling allegations of corruption.

Amid the growing crisis, many Nigerians are looking to the Dangote Refinery as a potential solution. Meanwhile, NNPC has explained that for the past 8-10 years, it has not paid subsidies directly. Instead, when importing Premium Motor Spirit (PMS) at a higher price, the government would instruct NNPC to sell it at a reduced rate. The government sometimes covered the difference, but at other times, NNPC had to absorb the shortfall.

Despite these financial challenges, NNPC has maintained that it is profitable, releasing data showing a profit of ₦3.29 trillion in 2023 and dividends of ₦2.2 trillion. However, they have not remitted dividends or paid taxes, as these funds have been used to cover subsidy-related debts owed by the Federal Government.

President Tinubu recently directed NNPC to use the revenue meant for the federation to clear the subsidy debt owed by the government. This directive highlights the complex financial situation, where NNPC’s reported profits are being used to service debt, raising concerns that the company may end the year with no profit unless additional funds are secured, likely through another crude-backed loan.

The situation has led to speculation that NNPC’s failure to remit funds to the national treasury could be confirmed. However, this interpretation depends on the perspective, as NNPC’s categorization of its debts as “obligations” rather than traditional debts has come under scrutiny.