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How NNPCL’s Financial Struggles is a Pretext for Increasing Fuel Prices

Published by Tope Fakinlede on September 2nd, 2024.

How NNPCL’s Financial Struggles is a Pretext for Increasing Fuel Prices

NNPC

Experts suggest that the Nigerian National Petroleum Corporation Limited (NNPCL) announcement regarding its financial difficulties could be a strategy to justify a hike in fuel prices.

On Sunday, NNPCL’s Chief Corporate Communications Officer, Olufemi Soneye, confirmed that the company is indebted to fuel suppliers but did not disclose the specific amount owed. Soneye’s statement indicated that this financial strain could jeopardize the company’s ability to maintain fuel supplies.

However, experts argue that this disclosure might be a pretext for the government to raise fuel prices, potentially to between N950 and N1,000 per litre. They point out that government officials have been hinting at this possibility over the past two weeks.

On Monday, Minister of State for Petroleum, Heineken Lokpobiri, urged NNPCL to stop selling fuel below the landing cost to combat smuggling. The Major Energy Marketers Association of Nigeria (MEMAN) reported that the landing cost of petrol in July 2024 was N1,117 per litre, with diesel (AGO) costing N1,157 per litre and aviation fuel (ATK) at N1,217 per litre.

An independent oil marketer, who wished to remain anonymous, noted that an increase in pump prices seemed inevitable due to the fully deregulated market. He attributed the situation to limited private importation and Nigeria’s declining crude oil production, which affects the country’s ability to import refined products. The Organisation of Petroleum Exporting Countries (OPEC) has also observed a decrease in oil output from several nations, including Nigeria.

Mr. Akin Akinade, a former chairman of the Independent Petroleum Marketers Association of Nigeria (IPMAN) at the Ejigbo Depot in Lagos, explained that his members do not buy directly from NNPCL but through third parties. He mentioned that prices at the depot are around N840 to N850 per litre, and after adding transportation costs, it is challenging for marketers to sell below these prices.

Tunji Oyebanji, CEO of 11 Plc (formerly Mobil Nigeria), told Daily Trust that selling below cost, whether from imports or local refineries, is unsustainable. He suggested that selling at a market-appropriate price could encourage more imports and ease financial pressures on NNPCL. Oyebanji expressed frustration at the lack of transparency regarding these issues.