- De-facto Subsidy Returns as Petrol Prices Rise
- Traders Continue to Supply Nigeria Despite Payment Delays
- Fuel and Power Subsidies Could Shave 3% from GDP in 2024 – IMF
Nigeria’s state-owned oil company NNPC is reportedly in debt to fuel traders to the tune of around $3 billion for imported petrol, sources told Reuters. The payment backlog, attributed to the tumbling naira currency and rising global fuel prices, suggests the return of de-facto subsidies, despite Nigeria’s efforts to curb costly energy subsidies.Thank you for reading this post, don’t forget to subscribe!
The payment delays, averaging more than 130 days instead of the usual 90, are hindering the government’s attempts to shore up finances. NNPC’s suppliers, including international traders and Nigeria-based trading houses, continue to supply fuel despite the delays.
The creeping return of fuel subsidies, abolished in May 2023, is impacting NNPC’s cash flow for imports and government revenues. Nigeria, heavily reliant on fuel imports due to mismanagement and under-investment in refineries, is facing logistical challenges leading to fuel shortages.
Rising global gasoline prices and a weaker naira have further strained NNPC’s ability to import fuel, leaving it as the sole importer in the country. The International Monetary Fund (IMF) warns that subsidies could shave up to 3% off GDP in 2024, underscoring the need for a sustainable solution.
SOURCE: Naija247news