The federal government has agreed to pay fuel marketing companies N30 billion ($158 million) to defray the extra costs incurred on previous gasoline imports due to the recent devaluation of the naira, Finance Minister Ngozi Okonjo- Iweala said Thursday. It is also set to pay N185 billion in outstanding subsidies to the marketers in the bid to encourage the resumption of fuel imports and alleviate a widespread fuel shortage, she said on state radio.
“We will pay them the exchange rate differentials that have been calculated by the PPPRA [Nigeria’s Petroleum Product Pricing Regulatory Authority]. We are ready to release N30 billion,” Okonjo-Iweala said. “All the issues have been resolved. In the last week, over $500 million Letters of Credit had been opened by banks on behalf of the marketers,” she added. The minister spoke after a meeting with the main fuel marketing companies in Nigeria, which reduced gasoline imports following continued delays in settling N264 billion ($1.41 billion) outstanding subsidies for earlier imports.
The cut in supply triggered a six-week gasoline shortage in the oil-rich West African country that threatens to mar general elections set for two weeks’ time. State Oil Company Nigerian National Petroleum Corp. said Monday it had fixed 800,000 mt of gasoline imports for delivery in March, which would help end the fuel shortage. Africa’s largest crude oil producer relies on imports for its fuel needs.
The country’s four state-run refineries are currently operating at around 10 percent of their combined name plate capacity of 445,000 b/d as they undergo major rehabilitation, NNPC officials said.
