Commodities, Energy, Frontier Markets

Nigeria Faces Another Crisis As Govt Faces “Severe Financial Strain” With “Empty Treasury” To Pay For Fuel Subsidies

Nigeria Oil FlagNigeria is likely to be hit by fuel shortages in the approaching weeks as government funds run low and they won’t be able to support payments for gasoline subsidies, Bloomberg reports, citing the head of Seplat Petroleum Development.

In three weeks we will be back to scarcity because we simply don’t have the money to pay for the subsidy,” Austin Avuru, CEO of Lagos-based Seplat, told Bloomberg on Thursday during a conference at the Nigerian Stock Exchange.

Last month, Nigeria nearly grounded to a halt during the nation’s worst fuel shortage in nearly a decade amid a dispute between fuel wholesalers and the outgoing government.

The shortage brought Nigeria’s economy to a standstill as airlines were forced to ground flights and banks to phone companies faced shutdowns.

Nigeria’s fuel wholesalers had stopped distributing the commodity, alleging that the government owed them around $2 billion, however government officials said that the wholesalers had been paid in full.

The fuel shortage had left domestic airlines grounded and left gas stations across the country dry. The shortage also affected banks and phone companies who rely on a steady supply of diesel to power its generators amid a shortage of public electricity across the country.

Nigeria is Africa’s biggest oil producer of about 2 million barrels per day, however it must import most of its fuel as it has limited functioning refineries and thus suffers frequent fuel shortages. The Nigerian government keeps prices at the pump below market prices and pays the difference in subsidies to importers.

President Muhammadu Buhari, recently took office on May 29, said this week his government is facing severe financial strain from a Treasury that’s “virtually empty” and billions of dollars in debt.


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