In a significant development for Nigeria’s fuel industry, NNPC Ltd has once again become the exclusive importer of petrol, known as premium motor spirit (PMS), as licensed local private firms face insurmountable challenges in obtaining foreign currency.
This revelation came from the chief executive of Nigeria’s national oil firm, Mele Kyari, during an energy conference on Monday, marking a retreat from the government’s recent move to open up petrol imports to private players just four months ago.
Nigeria, Africa’s largest oil exporter, has long grappled with the necessity of importing the majority of its fuel due to insufficient domestic refining capacity to meet the demands of its 200 million citizens.
This reliance on fuel imports has significantly strained the nation’s foreign exchange reserves, as it traditionally swapped crude oil for fuel, thus depriving itself of crucial U.S. dollars.
The decision to allow private firms to engage in petrol imports was part of President Bola Tinubu’s comprehensive reform agenda, aimed at reducing the country’s dependence on decades-old fuel subsidies.
This move was met with enthusiasm as several fuel companies commenced their imports in July. However, the latest statement by Mele Kyari reveals a troubling predicament for these private entities, as they now struggle to secure the essential foreign currency needed for importing petrol.
During his address at the energy conference, Kyari stated, “We are the only company importing PMS into the country,” emphasizing the limitations faced by private fuel companies in accessing foreign exchange.
He further clarified, “None of them (fuel companies) can do it today. For them, access to foreign exchange is difficult. We create FX, therefore we have access to FX and their access to FX is limited.”
Despite a more than 30% surge in global oil prices since July, petrol pump prices in Nigeria have remained stagnant, raising suspicions of a potential reemergence of government-backed fuel subsidies.
Mele Kyari did not directly respond to these accusations but argued that the current pricing structure indicated “the market is adjusting itself.”
Petrol plays a pivotal role in the daily lives of millions of Nigerians, who rely on it to power generators, especially in areas not connected to the national electricity grid.
The scarcity of foreign currency has exacerbated the situation, with Nigeria grappling with foreign exchange shortages that have caused the naira to weaken considerably on the parallel market.
The new central bank governor has underscored the enormity of the challenge, citing a nearly $7 billion backlog in foreign exchange demand that policymakers are currently contending with.
As the NNPC Ltd regains its status as the sole importer of petrol, the Nigerian government faces a complex task of addressing the foreign exchange crisis and ensuring the stability of the fuel market to meet the energy needs of its vast population.
