Fuel scarcity to bite harder as banks withhold financing from marketers

The fuel scarcity that has hit some parts of the country may not ease soon, as banks have reportedly withdrawn financing facilities to importers of the product for fear of uncertainty over what the incoming administration intends to do about the subsidy question.

A major player in the downstream sector of the nation’s oil and gas industry informed ThisDay that most banks have now classified subsidy as huge “political risk” which none of them is willing to bet on.

He stated that banks are unwilling to open letters of credit (LC) to finance importation of refined petroleum products, without a clear direction from the incoming government concerning the issue of subsidy.

He also revealed that the devaluation of the naira late last year created added burden on the banks as most of the marketers have been unable to pay the differentials on the loans following the devaluation since the current value is different from what the exchange rate was based on when they were taking loans to finance fuel import.

He disclosed that no marketer wants subsidy as it is because whichever way it is viewed, it is not in the interest of marketers.

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