There are fears that the pump price of petrol may increase at filling stations as the Nigerian National Petroleum Company Limited admits that it is facing challenges due to a $6billion debt.
Although the NNPC denied the fact initially, it admitted on Sunday that it owed its petrol suppliers the sum of $6billion, saying it was facing financial strains due to petrol supply costs.
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In a statement by its Chief Corporate Communications Officer, Olufemi Soneye, the NNPC subtly confirmed that the debt was the reason for the fuel queues at filling stations across the country, stating that it is affecting supply sustainability.
It was reported in July that Nigeria’s debt to suppliers of petrol surpassed $6billion, making the NNPC struggle to cover the gap between fixed pump prices and international fuel costs.
A Reuters report stated that the national oil company began struggling early this year when late PMS payments surpassed $3billion.
Traders said that the petroleum company had not paid for some imports done in January, so the debt keeps piling up. Under contract terms, NNPC is meant to pay within 90 days of delivery.
Since June, Nigeria’s tenders to buy PMS were smaller, traders said.
Soneye had earlier said that “NNPC Ltd does not owe the sum of $6.8bn to any international trader(s). In the oil trading business, transactions are carried out on credit, so it is normal to have outstanding amounts at certain times.
“However, NNPC Ltd, through its subsidiary NNPC Trading, maintains many open trade credit lines with several traders. The company is fulfilling its obligations on a first-in-first-out basis.”
