Nigeria is buying 100 million liters of gasoline from the spot market daily to end a two-month long fuel shortage that the state-owned oil company describes as dire.
The shortfall is a “force majeure situation,” which requires the purchases, equivalent to about 625,000 barrels of gasoline a day, Ndu Ughamadu, a spokesman for the Nigeria National Petroleum Corp., said in an interview Thursday. NNPC is taking the action to “increase supply and replenish strategic reserves,” and companies participating in a fuel swap program may get extra volumes of crude, he said.
Although Nigeria is Africa’s top oil producer, it currently imports almost all of its refined fuel needs because its refineries operate at a fraction of their capacity due to lack of maintenance and aging equipment. The nation imported about 250,000 barrels a day of gasoline during the period from November 2016 to November 2017, according to data on the NNPC’s website.
NNPC, the nation’s sole gasoline importer, is struggling to meet domestic fuel supply commitments under its so-called Direct Sale-Direct Purchase program, which allows companies to swap crude for petroleum products. Nigeria is swapping about 800,000 barrels a day of crude under the program, due to be renewed in April.
Retail fuel prices in Nigeria rose 28 percent in January, averaging 191 naira, or $0.53, a liter, compared with the official selling price of 145 naira, according to the Statistics Office. The government has said it has no plans to hike gasoline prices further.
Nigeria pays a fraction of the global price for gasoline. The fuel traded at $1.74 a gallon on the New York Mercantile Exchange at 8:14 a.m. London time, gaining about 2.5 percent this week.
Source: BloombergPrevious Next