BEVERLY HILLS, June 04, (THEWILL) –The shortage of petroleum products in Nigeria is not abating anytime soon because imports of the products into Nigeria are very low despite a deal between marketers and the federal government under former president, Dr. Goodluck Jonathan, after the government halted payment of subsidies estimated to be around $1 billion USD (N200 billion).
The marketers, who account for about 40% of imports, had agreed to resume imports after the deal was reached on May 25.
But Platts, a leading global energy intelligence firm which tracks prices and movement of commodities, in a report Wednesday said that imports into Nigeria — which typically imports about 1 million mt/month making it the region’s largest importer of gasoline — continued “at a trickle,” due to little guidance from the new government inaugurated Friday.
Importers and distribution companies were seeking more solid assurances over the payment of the outstanding subsidy, sources said, a signal that last week’s deal had not managed to restore confidence, Platt said in its report.
THEWILL can report that Queues for petrol are still easily seen in several major Nigerian cities including capital Abuja.
The government pays a subsidy on the imports, which is the difference between the landing cost of the fuel and the officially regulated domestic pump prices.
President Muhammadu Buhari has openly criticized the subsidy scheme describing it as a fraud against the Nigerian state. “I don’t understand this thing they call subsidy. Who is subsiding who? It is a fraud,” he once said during a television interview monitored by THEWILL before the election in March.
Several analysts and anti-graft groups have asked the new government to scrap the programme, which has been severally abused since it was introduced in the 90s. Nigeria is believed to have lost an estimated $10 billion through scams perpetrated in the scheme.
The arbitrage from Northwest Europe to West Africa has acquired increasing importance in recent months, as structurally shrinking arbitrage opportunities to the US Atlantic Coast and the Persian Gulf have limited outlets for Europe’s net-long gasoline market.
“Nothing has been done recently…[it’s] quiet,” said a European trading source, referring to trading of Northwest European gasoline cargoes to West Africa.
The FOB Amsterdam-Rotterdam 10 ppm premium unleaded gasoline barges — a pricing benchmark for the lower-octane, higher-sulfur WAF-grade — were assessed at $700/mt Tuesday, up from $693.25/mt Monday.
