Nigerian Fuel Retailers Seek N100bn Loan to Mitigate Subsidy Removal Impact
The Petroleum Product Retail Outlet Owners Association of Nigeria (PETROAN) has clarified that its request for a N100bn grant from President Bola Tinubu is not an appeal for free money but a loan intended to stabilise its embattled members.
The association’s president, Billy Gillis-Harry, explained that the funds would serve as seed capital for an energy bank, enabling marketers to access loans at single-digit interest rates to cope with the financial strain caused by the removal of fuel subsidies.
A Sector Under Pressure
President Tinubu’s decision to eliminate fuel subsidies upon assuming office in 2023 has caused significant disruptions in Nigeria’s downstream oil sector. The deregulation of the market led to skyrocketing costs, with the expense of lifting a 33,000-litre truck of petrol rising from N7m in mid-2023 to N30m by late 2024.
Faced with these challenges, some marketers have been forced out of business, while others resort to pooling resources to purchase and distribute fuel.
In a document made available to the press, Gillis-Harry warned that without government intervention, up to 10,000 marketers risk closure. “This request is in response to the threat of job losses that would result from the removal of the fuel subsidy,” he said.
Proposal for an Energy Bank
Addressing the misconceptions surrounding the request, Gillis-Harry stated, “We didn’t say they should give us free money. We said, ‘Put it in the energy bank and give it to us as a single-digit interest loan.’ With that, the fuel price will come down.”
He highlighted the crippling effect of commercial bank interest rates, which range from 36% to 40%. “If we can access loans at 9% interest, it would make a significant difference. The N100bn, managed by the private sector, would be recycled and could grow to over N700bn within three years,” he added.
The National Vice President of the Independent Petroleum Marketers Association of Nigeria (IPMAN), Hammed Fashola, echoed this call for a specialised financial institution tailored to the oil and gas sector. “A bank of oil and gas, like the Bank of Industry, would understand our unique needs and help us secure the necessary investment for this capital-intensive business,” he said.
Broader Recommendations
Beyond financial support, Gillis-Harry urged the government to prioritise investment in critical infrastructure, including refineries, pipelines, and storage facilities, to boost Nigeria’s refining capacity and reduce dependency on imported petroleum products.
He also advocated for the promotion of compressed natural gas (CNG) as a viable alternative, recommending expanded infrastructure and regulatory reforms to attract private sector investment.
To curb cross-border smuggling, he proposed collaboration with neighbouring countries and the implementation of digital tracking systems to monitor the movement of petroleum products.
Reflecting on 2024 and Looking Ahead
Gillis-Harry described 2024 as a transformative year for Nigeria’s downstream sector, citing key developments such as the rehabilitation of the Port Harcourt Refinery and the launch of the Dangote Refinery. While acknowledging persistent challenges, he expressed optimism about the sector’s potential for growth and innovation.
As Nigeria transitions its energy landscape, Gillis-Harry called for the privatisation of the Warri and Port Harcourt refineries, alongside a renewed commitment from stakeholders to sustainable development and technological advancements.
With the country’s oil and gas sector at a crossroads, the proposed energy bank could serve as a lifeline for marketers and a catalyst for stabilising fuel prices, ensuring that the burden of subsidy removal does not disproportionately impact consumers or businesses.
