Nairametrics| Nigerians have been treated to their New Year’s dose of petroleum problems as the price of kerosene has skyrocketed with some cities reportedly selling a liter of the product for as much as N400. No official reason has been given for the sudden rise in price. However, indications are that a combination of factors may be inhibiting the importation of the product into the country.
Unresolved issues on borrowed funds: Several importers are owing banks billions of Naira, which is hindering their ability to access funds to import the product into the country. he marketers under the aegis of the Independent Petroleum Products Importers (IPPIs) have cited government’s discontinuation of the fuel subsidy regime and failure to pay outstanding arrears before the new pricing regime as reasons for their problems. The marketers stated that since government could not pay them for imported products between 2014 and 2015 as agreed, the interest accumulated over time, has amounted to N160 billion.
However, it seems that the effect of the delay in payment is affecting not only the marketers but also the banks that they owe money. According to a financial analyst at WSTC Financial Services Limited, Olutola Oni, “If the exchange rate differential is factored in, there would be a huge gap and the question is: who bears the loss? This is part of the causes of loan default.
“Even if banks foreclose collaterals, they can only be successful if the value is up to loan value. In exchange issues like we have, collaterals are always below. The next thing is restructuring. This is also subject to performance,” he observed.
There are however no indications that the situation will abate soon as marketers are already complaining about the effect of the exchange rate and the rigidity in petrol pricing, which they believe will eventually lead to several marketers shutting shop and a resurgence of long queues at filling stations
