Nigeria’s Debts Piling Up
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President Bola Tinubu is having sleepless nights as his nation’s debt keeps piling up over $3 billion owed to global oil and gas interests
Nigeria has accumulated roughly $3 billion in debts to oil-trading houses and global energy majors for fuel supplies, Reuters reported on Friday, citing industry sources.
The nation is four-to-six months behind schedule in paying for the fuel it purchases with cargoes of crude oil, according to the report.
Nigeria, the largest oil producer in Africa, does not have enough refining capacity to meet domestic fuel demand, in part because many of its own refineries have become dilapidated over the years. It therefore has to import petrol, diesel, and processed petroleum under so-called Direct Purchase Direct Sale (DSDP) deals, which allow it to procure fuel in exchange for crude oil. Nigeria’s major suppliers include BP, TotalEnergies, Vitol, and Mercuria.
Under the reforms proposed by the new president, Bola Tinubu, the country plans to scrap the swap contracts and instead make payments in cash, as paying for fuel deliveries with crude means less is available for export, thus lower revenue.
In a step to combat the fuel shortages, last month Nigeria announced the commissioning of the new Dangote Petroleum Refinery, a processing plant with a capacity of 650,000 barrels per day. The refinery was built by Dangote Group, a conglomerate owned by Africa’s richest man, Aliko Dangote, at the Lekki free trade zone near the city of Lagos. According to Dangote Group, the processing plant is expected to cover all of Nigeria’s fuel demand and produce extra volumes for export.
Crude processing was scheduled to begin in June, but analysts warn that the launch of operations may be postponed due to the intricacies of the commissioning process. The facility is scheduled to reach about 50-70% of processing capacity next year and full capacity by 2025.
Source Reuters/RT
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