Nigeria’s debt to petrol suppliers has surpassed $6 billion, doubling since early April.
According to a report by Reuters on Thursday, the development comes as the Nigerian National Petroleum Company (NNPC) Limited strives to cover the gap between fixed pump prices and international fuel costs.
The report noted that the NNPC started struggling early this year when late petrol payments were over $3 billion.
“The company has still not paid for some January imports, traders said, and the late payments amount to $4 billion to $5 billion,” Reuters said.
Under contract terms, the report said the NNPC is obligated to pay within 90 days of delivery.
“The only reason traders are putting up with it is the $250,000 a month (per cargo) for late payment compensation,” an industry source told Reuters.
The report quoted sources to have said at least two suppliers have already withdrawn from current tenders after reaching their self-imposed debt exposure restrictions to Nigeria.
This means they would not provide any more petrol unless they are paid, Reuters added.
“Traders thrive in risky environments, but they place limits on how much credit they allocate per trade in order to avoid too much exposure on one borrower. These limits vary by company based on their size and where they operate,” the publication said.
Nigeria’s tenders to buy petrol in June and July were consequently smaller, traders told Reuters.
Two sources said the NNPC will import about 850,000 tonnes in July via tender — down from the typical 1 million tonnes in previous months.
