The Nigerian National Petroleum Corporation (NNPC) has asked trading firms for emergency supplies of 500,000 tonnes of petrol to replace cargoes that were rejected because of their poor quality, two sources with direct knowledge of the matter said.
Megacity Lagos and the capital Abuja face fuel shortages, and over the weekend, queues built up outside some petrol stations.
The emergency supplies equal 1,415, 800,000 litres of petrol, which will just be OK for about 28 days, at 50 million litres a day.
The Nigerian Midstream and Downstream Petroleum Regulatory Authority said it found gasoline with methanol above national specifications in the supply chain and removed the fuel from circulation.
Methanol, in small amounts, is a regular gasoline additive.
The regulator said the supplier of the off-specification gasoline was known but it did not name the firm.
It added NNPC had “intensified efforts at increasing the supply of petrol … to bridge the unforeseen supply gap.”
Nigeria depends almost entirely on imports to meet its domestic petrol needs after many failed initiatives to revamp its dilapidated refineries.
NNPC handles nearly all these imports through crude-for-fuel contracts, known as direct sale, direct purchase (DSDP), with consortia of local and foreign oil firms.
Each consortium receives 20,000 barrels per day (bpd) of crude oil in exchange for products, making the combined total about 320,000 bpd of Nigeria’s output. Nigeria produces about 1.5 million bpd of crude in January.
Cheap fuel is one of the few benefits Nigerians feel they get from the government, which sets price caps at the pump through a controversial and patchy subsidy scheme.
With soaring oil prices, the emergency stopgap will be costly.
The International Monetary Fund (IMF) said on Monday Nigeria should axe subsidies due to a widening budget deficit.
