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International oil refineries are attracting marketers by offering enticing credit arrangements.

In an attempt to aid Nigerian oil marketers in overcoming the challenge of a shortage of dollars within the country, foreign crude oil refiners have initiated the provision of credit facilities.

A reliable source has indicated that foreign refiners opted to extend credit facilities to Nigerian oil marketers due to concerns about potentially losing a significant market.

This was prompted by the elimination of subsidies, leading to a substantial reduction in the nation’s petrol consumption.

Factors such as forex scarcity and high inflation rates have also eroded the purchasing power of marketers for importing petrol.

Presently, it’s more financially viable to buy products locally than to import due to the escalating FX rate.

Leading companies like Glencore are willing to offer products on credit to Nigerian oil marketers.

However, accepting credit comes with higher interest rates and additional charges.

Consequently, it’s advantageous to either purchase products locally or collaborate with other importers to procure in bulk from refineries, thereby reducing overall costs compared to the Private Finance Initiative (PFI).

Additionally, the marketers are actively seeking funds from foreign banks to facilitate product imports, as domestic banks are reluctant to expose themselves to significant forex risks.

Data from the Nigerian Midstream and Downstream Petroleum Regulatory Authority indicates that petrol consumption in the first half of 2023 stood at 11.26 billion litres.

However, the removal of the petrol subsidy regime by the Federal Government on May 29 led to an average daily drop of around 18.5 million litres in June from the previous 66 million litres per day.

Speaking during the inaugural importation by independent marketers in July, Adebowale Olujimi, the Chief Executive Officer of Emadeb Energy, expressed that relying on petrol imports is no longer sustainable. He emphasized that the solution lies in revitalizing local refining.

He stated, “Reliance on petrol imports is an unsustainable approach for a country.

The surge in PMS price to over N600 per litre underscores the challenges of this business.

It demands substantial US dollars to import products.

The logical path forward is the revival of local refineries.”

Despite the diminished demand for petrol, refiners from Europe, the Middle East, and Russia are in competition to increase their petrol exports to Nigeria.

According to the European trade overview by Argus, Russian petrol’s growing share in Nigeria has surged to 24,000 barrels per day in 2023, as opposed to 3,700 b/d in 2022.


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