Nigeria to buy up to 1.55-million tonnes of petrol to stave off shortages
London — Nigerian state oil company NNPC has issued a tender to buy up to 1.55-million tonnes of petrol from January to April in its latest effort to stave off shortages that have recently plagued Africa’s most populous nation.
The tender, which was issued on Monday afternoon and closed on Tuesday, sought 42 cargoes of petrol, each 37,000 tonnes, on top of the volumes NNPC is taking via ongoing crude-for-product swap contracts.
Traders said the call for cargoes went only to the companies holding the swap contracts, dubbed direct sale, direct purchase agreements (DSDP).
NNPC is asking for pre-delivery of the petrol, with payment up to 45 days after delivery in either cash or crude oil. It is seeking 15 cargoes for delivery in each of January and February, and six in each of March and April.
Nigeria has been eagerly buying fuel since queues popped up across the country last month. December is typically the peak demand season in Nigeria, but traders said imports sagged in October, November and even December due to the structure of NNPC’s oil swap contracts. The latest tender would mark a substantial addition to imports that are typically about 1-million tonnes a month.
"Even if full volumes are not ultimately delivered, this tender shows that NNPC is serious about rebuilding onshore and offshore stocks following dismally low imports in November and December," said James McCullagh, oil products analyst with Energy Aspects.
Queues are not uncommon in the oil producer that refines very little of its own petroleum, but petrol prices and shortages are a politically charged subject. Price caps at 145 naira per litre make it tough for many importers to profit on petrol, and NNPC has imported as much as 90% of the nation’s petrol needs over the past year through its swaps programme.
Late last month, NNPC said it had more than doubled the daily supply of fuel, attributing the shortage to a "hiccup in the supply chain" after rumours of a planned increase in the petrol price led to hoarding. It said there were no plans to increase prices.
According to the country’s ministry of petroleum resources, President Muhammadu Buhari also set up a special committee "to identify the immediate and remote causes of the fuel scarcity with a view to finding both immediate and long lasting solutions to the challenge".