FT: More on Nigeria’s fuel problems

A quick follow-up to our Nigerian fuel scarcity story from Monday, which highlighted the country’s growing exposure to potential fuel shortages if and when oil prices continue to descend, and as the national currency weakens.

As already noted, Nigeria may be a net oil exporter, but the country remains dependent on product imports to keep its economy ticking over. Those products are imported by local companies from international oil trading intermediaries, and distributed at prices which are further subsidised by the government.

The problem Nigeria faces now, however, is two-fold. First, it still owes international intermediaries substantial arrears and has already had to resort to so-called oil-for-product swaps to ensure imports keep flowing, albeit on terms which look increasingly unfavourable.

Second, while Nigeria has in the past favoured domestic importers and marketers in favour of international parties when it comes to payments, these domestic entities are also complaining about delayed or non-existent payments.
MORE