There are strong indications that the much dreaded long queues at filling stations may make a return as fuel importation has reached its lowest ebb in recent times. This is as a result of decisions by foreign suppliers to cut their supply to Nigeria over pending $985 million debt overhang.
According to Daily Sun, the current situation can be linked to the volatile nature of the Naira I recent times. Executive Secretary, Depot and Petroleum Products Marketers Association (DAPPMA), Mr. Olufemi Adewole, said that the debt was accrued for supplies made when the exchange rate was N197/$1, but which could not be settled due to forex scarcity until the it dropped to N315/$1.
These transactions, according to him were carried out December 2014 and December 2015, but payment for over N448 billion was not cleared by the Federal Government until early 2016, when the exchange rate had faltered.
Resulting from the debt profile, banks have refused to fund importers’ procurement requests, which is why in turn, suppliers have cut their deals. Currently, importers depend on whatever the NNPC is able to import.
Manager, Corporate Affairs, NIPCO Plc, Mr. Abiodun Lawal also reiterating the above position, said the independent importers faced even worse fates as they rely only on parallel market exchange rates to source forex due to lack of support from the FG.
Rates at the parallel market are always higher than at inter-bank levels, leading to a higher debt profile for independent marketers. He said that the only reason queues have not been prominent is the sharp decline in fuel consumption of the average Nigerian.
Parts of this article originally appeared in Daily Sun.