NAIRA FREE FALL: FG CANT PAY SUBSIDY, OIL MARKETERS STOCKPILLING PRODUCTS AS FUEL SCARCITY LOOMS

The relative stability Nigerians have enjoyed in the supply of Premium Motor Spirit across the country for some time now, may be shortlived in the coming days as the federal government is having difficulty in paying oil marketers their due subsidy.

Last Wednesday’s decision of the Central Bank of Nigeria to fix the exchange rate of the naira to the dollar at 198 and the initial devaluation of the currency as well as rising petrol subsidy arrears have forced some oil marketers in the country to reduce the stock of petrol they supply to the market.

The marketers, who are predicting a crisis situation soon, especially with the non-payment of the subsidy arrears by the Federal Government, have moved to constrain product supply in order to minimise the loses that might occur if the arrears were further delayed as a result of uncertainties surrounding the forthcoming general elections.

The recent rebound in global oil prices, especially the Brent crude, was not helping the situation as the subsidy arrears had continued to rise just as interest on loans borrowed from banks by the marketers to finance fuel importation. Industry stakeholders fear that the marketers might soon be in trouble because of the current market realities.

Despite the recent reduction in the pump price of petrol from N97 to N87 per litre, the Federal Government, according to the Petroleum Products Pricing Regulatory Agency, still pays a subsidy of N14.77 per litre of petrol as of February 19, 2015.

The Major Oil Marketers Association of Nigeria recently said the devaluation of the naira would have a negative impact on the pricing of petroleum products. The marketers also accused financial institutions for developing cold feet towards the financing of products’ importation because of rising debt profile, among others.