Yemisi Izuora/Ijeoma Agudosi-Agency Report
The federal government has increased petrol import allocations for the second quarter from the previous quarter as it seeks to avoid another fuel shortage.
The government has battled fuel shortages for more than a month, and industry sources blamed the withdrawal of independent fuel marketers from the first-quarter import allocation program of the Petroleum Products Pricing Regulatory Agency.
Government has therefore issued import permits for 3.5 million mt of petrol under the second-quarter import program, from 3 million mt in the first quarter, PPPRA spokesman Lanre Oladele told Platts.
The allocation was issued to state oil firm Nigerian National Petroleum Corporation and other private fuel marketers, Oladele said.
Beneficiaries include 47 companies, among them Oando, Sahara Energy, Forte, Conoil, MRS Oil and Gas, Shorelinks, Hyde Energy, Heyden and the local downstream subsidiaries of ExxonMobil and Total.
“The volume is higher than the first quarter because the PPPRA took into consideration the demand level and what will be sufficient for the country,” Oladele said.
In the first quarter the regulator handed 78% of the allocation to NNPC and 22% to private companies and fuel marketers.
The spokesman said the allocation ratio has been reversed in the Q2 program, with NNPC handling 41.7% and private marketers 58.3%.
“The new allocation ratio followed extensive deliberations by all stakeholders and in particular the commitment the government received from the marketers,” said Oladele, adding that the decision to give a greater percentage of the allocation to private companies was to allow NNPC focus on the key task of building domestic fuel reserves.
The allocations under the PPPRA framework have mirrored an uptick in blending activity in recent weeks for West African grade gasoline in Northwest Europe, the main supply source for the lower-octane, higher-sulphur WAF grade.
The allocations were a response to growing concerns around gasoline stock levels in the country, sources have said.
However, uncertainty over the ability of importers to absorb the entire allocated volume remains a concern amid a lack of foreign exchange availability and access to credit.
“Not everything will be recovered,” said a source active in the market with reference to the allocated volumes.
Nigeria’s main fuel marketers, however, demanded increased allocations, blaming the lingering, crippling gasoline shortages in the oil-producing country for not taking taking part in the Q1 program.