17th November, 2015
Nigeria has issued its final allocations for subsidised gasoline imports for the fourth quarter at 1.41 million tonnes, traders and a senior source at the state-run fuel supply regulator said on Tuesday.
The West African nation imports the bulk of its gasoline requirement because of its dilapidated refining system, which President Muhammadu Buhari is keen to revive, though delayed subsidy payments and the low availability of dollars in the economy has made it increasingly difficult for importers to meet the country’s needs, creating a shortage.
Nigerians have also started panic-buying, forming long queues at petrol stations for the first time since Buhari took power in May.
A severe fuel crisis had crippled the country in May because of a stand-off between marketers and his outgoing administration over whether their debts would be honoured.
The Petroleum Products Pricing Regulatory Agency (PPPRA) looks after the fuel imports that are subsidised — about half of the total — and allocates its gasoline requirements quarterly to a number of importers.
The number of importers was 37 in the third quarter, but the PPPRA source said that the list was trimmed to between 20 and 30, while traders put the number at about 21.
Africa’s biggest oil producer has been hit hard by the more than halving of global crude prices, which forced the central bank to introduce some foreign exchange restrictions in June to stop its currency from crashing. Even though oil is not a restricted item, dollar availability remains low.
Two weeks ago Nigeria’s new government approved payment of 413 billion naira ($2 billion) in subsidies, some still dating from 2014, but funds have yet to be transferred because they have yet to signed off by the national assembly.
Importers have not been paid their subsidy since the change of government and the delay has worsened the financial crunch for importers.
Oil traders said the import allocations from the second and third quarters went only half to 60 percent fulfilled because of the finance problems.
A total of 2.97 million tonnes of gasoline was slated for import into Nigeria for the fourth quarter through the subsidy scheme and state oil company NNPC. About 1.6 million tonnes will be brought in via NNPC through offshore processing agreements, a type of crude-for-product swap.
The total volume of gasoline is lower than in the past at around 3.7 million tonnes but should more than cover domestic demand with 42.5 million litres a day, the PPPRA source added.