Banks Pledge N3.5tn In Loans To Support Nigeria’s Petrol Importation Efforts

Banks Pledge N3.5tn In Loans To Support Nigeria’s Petrol Importation EffortsBanks in Nigeria are preparing to increase their financing for petrol imports to N3.5 trillion as more marketers seek funding to import fuel, despite efforts to promote local production led by the Dangote Refinery.....KINDLY READ THE FULL STORY HERE▶

According to sources within the banking sector, financial institutions are receiving a growing number of loan applications for petroleum product imports. A senior official in a tier-1 bank’s oil and gas division revealed that just last week, a loan request of N250 billion landed on his desk — the third such request in the past month.

The total banking sector funding for petrol imports is expected to reach N3.5 trillion by the end of 2024. The bank executive explained: “We are seeing a surge in requests from petroleum marketers seeking loans for fuel imports, a trend we hadn’t seen before, even after the President declared the end of fuel subsidies.”

He added, “Our due diligence has shown that deregulation is gaining momentum across both the private and public sectors. While we previously hesitated to lend to petrol marketers due to regulatory challenges and the risk of defaults, we’re now observing a shift in the market, particularly with the end of subsidy policies.”

Historically, banks were reluctant to extend credit to petrol marketers due to challenges around regulated pump prices and past defaults on oil and gas loans. However, the shift in market dynamics appears to be prompting a change in approach.

NLC Alleges Overpricing of Petrol

Meanwhile, the Nigeria Labour Congress (NLC) has raised concerns over the current pricing of petrol, accusing marketers of inflating the price above the true market value. In a communiqué released following its National Executive Council meeting in Port Harcourt, NLC President Joe Ajaero expressed alarm over what he described as “shenanigans” in the pricing of Premium Motor Spirit (PMS), also known as petrol.

The NLC argued that there is a possible collusion within the sector, as the current pump price is significantly higher than the actual market price. They suggested that marketers, in collaboration with powerful players in the industry, may be exploiting Nigerian consumers. This suspicion is fueled by the ongoing controversy surrounding the pricing of petrol, which has led to strained relations between marketers and the Dangote Group, a major player in Nigeria’s oil sector.

Ajaero pointed out that despite Nigeria having domestic refineries under construction, petrol marketers are still eager to import refined products. This, he argues, raises questions about the fairness of the pricing structure, given the numerous costs involved in the importation process, including taxes, import charges, and fees to various agencies such as the Nigerian Port Authority (NPA) and the Nigerian Maritime Administration and Safety Agency (NIMASA).

The NLC’s statement underscores a growing concern that Nigerians are being overcharged for petrol, with many wondering why local refineries, such as those from Dangote and other initiatives, are not being fully utilized to meet domestic demand.

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