Nigeria’s debt to suppliers of Premium Motor Spirit, popularly called petrol, has surpassed $6bn, doubling what it was since early April, as the Nigerian National Petroleum Company Limited struggles to cover the gap between fixed pump prices and international fuel costs, six industry sources told Reuters.
Although this was swiftly described as false by NNPC on Thursday, the Reuters report stated that the national oil company began struggling early this year when late PMS payments surpassed $3bn.
The company has still not paid for some January imports, traders said, and the late payments amount to between $4bn and $5bn. Under contract terms, NNPC is meant 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,” one industry source said.
At least two suppliers already stopped participating in recent tenders after hitting self-imposed debt exposure limits to Nigeria, the sources said, meaning they will not send more PMS until they receive payments.
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.
As a result, Nigeria’s tenders to buy gasoline in June and July were smaller, traders said. NNPC will import via tender about 850,000 tonnes in July, two of the sources said, down from the typical one million tonnes in previous months.
