In an effort to assist Nigerian oil marketers in overcoming the challenge of dollar scarcity in the country, foreign crude oil refiners have started to offer credit facilities,  The PUNCH has learnt.

 A source close to the matter hinted that foreign refiners decided to give Nigerian oil marketers credit facilities because they were worried about losing one of their major markets, due to the removal of subsidies, which had made the country’s petrol consumption drop significantly, forex scarcity and the high inflation rates, which had reduced the purchasing power of marketers to import petrol.

“As of today, it pays you more to buy than to import because of the FX rate that has been going up. If you take products from the likes of Glencore and others, you would be exposed to high forex rates when you want to pay for the product.

“As a matter of fact, foreign refiners have been asking for meetings with Nigerian oil marketers because they want to give us products on credit because a lot of people don’t have that money to buy. But if you accept products on credit from them, the interest rate would also be higher, and you would also pay some charges.

“So, it pays to either buy locally or team up with other importers to buy in bulk from those refineries in order to reduce the landing cost, which will be better than buying PFI (Private Finance Initiative),” the source told The PUNCH.

Private Finance Initiative is a way by which public sector projects are financed through investments by private sector investors.

The PUNCH also gathered that marketers were also seeking funds from foreign banks to finance the importation of products, as local banks were unwilling to risk high forex exposure.

Data from the Nigerian Midstream and Downstream Petroleum Regulatory Authority showed that consumption in the first half of 2023 was 11.26 billion litres.

However, the country’s PMS consumption dropped by an average of about 18.5 million litres daily in June from 66 million litres per day before the Federal Government ended the petrol subsidy regime on May 29.

While speaking at the ceremony heralding the first importation by independent marketers in July, Emadeb Energy’s Chief Executive Officer, Adebowale Olujimi, said petrol importation was no longer “sustainable.”

According to him, resuscitating local refining is “the way to go”.

“Petrol importation is not a sustainable way for a country to run. PMS price rising to over N600 per litre is an indication that the dynamics of the business are a tough one. It requires huge US dollars to bring products. The way forward is for local refineries to be revived,” he said.

The PUNCH findings come on the heels of a similar report published by Reuters recently.

According to the report, despite the decrease in demand for petrol, refiners from Russia, the Middle East and Europe are currently competing to increase exports of petrol into Nigeria.

Data sourced by The PUNCH from Argus on Nigeria’s gasoline European trade overview showed the rising share of Russian petrol finding a home in Nigeria had so far risen to 24,000 barrels per day in 2023, compared with 3,700 b/d in 2022.

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