Share

Fuel crisis: Nigeria moves as queues grow

Abuja - Nigeria's finance ministry has paid importers 156bn naira ($790m) to cover subsidy payments owed from 2014, it said on Thursday, seeking to ease fuel shortages in major cities.

Queues at petrol stations have been growing over the last few weeks and worsened in recent days. A neglected refining system means Africa's biggest oil producer is almost wholly reliant on imports for the 40 million litres per day of gasoline it consumes.

The fuel crisis began in early March when slumping oil prices and an impending general election sent the local currency to record lows, hitting importers who have struggled to open letters of credit with banks. Truckers, unable to discharge tankers, went gone on strike over the cash crunch.

The finance ministry issued Sovereign Debt Notes (SDN) to fuel marketers in March, but banks remained reluctant to issue letters of credit until they matured.

"Even though we had the SDNs, they (banks) never had enough confidence. Now that it has been honoured, they can open L/Cs (letters of credit)," Obafemi Olawore, the executive secretary of the Major Oil Marketers Association of Nigeria (MOMAN) said.

"We didn't have the money to place orders and pay contractors, like the truckers ... who went on strike."

The post-dated SDNs of 100bn naira matured on Thursday, an emailed statement from the finance ministry said, along with an additional 56bn naira in interest to marketers, which is expected to allow importers to complete their deals.

Oil traders said plenty of product was waiting offshore to discharge but payment uncertainties have held it back.

Despite the payment, another 200bn naira is still outstanding, which includes foreign exchange from 2014 and 2015 and about 40 billion in subsidies accumulated so far in 2015, Olawore said.

Gasoline is heavily subsidised by the government via the Petroleum Products Pricing Regulatory Agency (PPPRA), and outgoing President Goodluck Jonathan's own efforts to scrap subsidies in early 2012 caused riots. Slow repayment of subsidies has been a problem for the last few years.

We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Rand - Dollar
18.94
-0.1%
Rand - Pound
23.91
-0.0%
Rand - Euro
20.41
+0.1%
Rand - Aus dollar
12.33
+0.1%
Rand - Yen
0.13
-0.0%
Platinum
908.05
+1.2%
Palladium
1,014.94
+1.3%
Gold
2,232.75
-0.0%
Silver
24.95
-0.1%
Brent Crude
87.00
+1.8%
Top 40
68,346
0.0%
All Share
74,536
0.0%
Resource 10
57,251
0.0%
Industrial 25
103,936
0.0%
Financial 15
16,502
0.0%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders