Nigeria has granted licences to 40 companies to import around 1.85 million tonnes of gasoline by the end of June, Nigerian National Petroleum Corporation (NNPC) and oil industry sources said, as the country takes measures to avoid fuel shortages.
Nigeria is Africa’s top oil producer but relies on fuel imports because its refineries work at a fraction of their capacity due to poor maintenance and old age.
Africa’s most populous nation suffered fuel queues in February and March, prompting state oil firm NNPC to release stocks.
“The (oil) Minister has approved the allocation of a total volume of 1,854,314 metric tonnes of premium motor spirit known as petrol as supplementary volumes for first quarters 2014 and second quarter 2014 June only delivery,” NNPC said in a statement issued last week and confirmed by importers.
Import allocations, typically done on a quarterly basis, have been delayed due to disputes between the government and traders over a backlog of subsidy payments.
Nigeria belatedly issued its first quarter gasoline allocation at the end of February. In an attempt to get the calendar back on track, it has issued its second quarter allocation in two parts.
Some 750,000 tonnes have been allocated as “supplementary volumes” for the first quarter, whilst another 1.1 million tonnes have been designated for June-only delivery, the NNPC statement said.
“The idea of June only is to revert back to the normal quarterly sequence, ie July-September and October-December,” said Ohi Alegbe, a spokesman for the NNPC.
Alegbe said the first quarter supplement was designed to cover “any under-delivery by marketers due to unforeseen financial challenges”.
Industry sources said some of the winners for the second quarter included MRS Oil Nigeria, Conoil , Total, Oando, Forte Oil , Mobil Oil, Masters Energy, Techno Oil, Folawiyo Oil & Gas and NIPCO.
Oando, Total’s local unit, and Folawiyo, in which global commodity house Glencore is a minority stakeholder, also won allocations in the first quarter.
Traders welcomed the attempt to get the issuance cycle back on track, but noted that the total volumes allocated for the second quarter were significantly down on the 3.1 million tonnes that were allocated for the first quarter.
“It’s good to see us revert back to the old sequence of April to June, July to September and October to December and not the February to May, June to August we shifted to two to three years ago,” one trader said. “That helps with simplifying the planning of imports.”
He suggested that the lower volumes could reflect the fact that the NNPC still has a lot of fuel in storage but supply chain issues are likely to be restricting adequate supplies into the market.
“We also note the increase in the number of importers from 27 in Q1 to 40 in Q2,” he added. “This could again be due to the view that marketers are likely to have adequate capacity to deliver smaller volumes as against sharing large chunks to a few players.”