A Review of the Nigerian Energy Industry

PPPRA cuts Q2 petroleum import allocations by 50%

Petrol dripping from pump.
Petrol dripping from pump.

Oscarline Onwuemenyi

26 March 2015, Sweetcrude, Abuja –
The Federal Government has issued permits allowing 1.5 million mt in petroleum imports in the second quarter, slashing Q1 permitted volumes in half after private companies demanded the lower allocations due to rising import costs and a government subsidy dispute.

The Petroleum Products Pricing Regulatory Agency (PPPRA) issued permits for around 3 million mt of petrol in Q1, which the agency said at the time was to cover for the nearly absent output from domestic refineries.

“For the second quarter, all major marketers reduced their request for allocation because even they have stagnated on meeting Q1 allocations,” said Femi Lawore, spokesman for the Major Oil Marketers Association of Nigeria, an umbrella group for the main fuel marketing companies in Nigeria.

A PPPRA source said Q2 permits were issued to marketers March 18-20.

“Their allocations were halved based on the performance in the first quarter,” the source said.

Nigeria was hit with a petrol shortage in early February after marketers cut back imports under the Q1 program following continued delays by the government to settle more than Naira 264 billion ($1.41 billion) in debts owed on subsidies for previous imports.

Import costs have also risen following the devaluation of the Naira currency and higher bank charges.

Industry officials said yesterday while the government has paid N100 billion of the total outstanding subsidy debt, marketers are concerned the debt may continue to mount even on Q2 imports, particularly as they come after the presidential election set for March 28.

The PPPRA also reduced the number of import permits to 36, from 42 in previous quarters, sources at the agency said.

Despite being Africa’s top crude exporter and producing around 2 million b/d, Nigeria imports more than 85% of its refined oil products needs due to poor performance of its domestic refineries.

It imports petroleum products through two sources: PPPRA allocations to private companies and swap agreements by state-owned Nigerian National Petroleum Corporation (NNPC) with providers to exchange crude oil for gasoline.

NNPC, which manages the refineries, has said it was repairing the refineries to raise capacity utilization to 90% of the combined total of 445,000 b/d, from the current low of around 10%.

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