A shortage of petrol in some Nigerian states is due to the inability of petroleum marketers to obtain letters of credit (L/Cs) from commercial banks for fuel imports according to Nigeria's fuel regulator.

Executive secretary of the Petroleum Product Pricing Regulatory Agency (PPPRA), Farouk Ahmed, blamed two recent devaluations of the naira by the Central Bank of Nigeria (CBN) for the L/C shortage.

Devaluations

The CBN's first devaluation on 28 November 2014 saw the Nigerian currency devalued from 155 naira to 168 naira to one US dollar.

The second devaluation on 18 February 2015 brought the exchange rate to 199 naira to one US dollar.

Price confusion

The two devaluations in quick succession, coupled with delivery delays, has resulted in confusion amongst traders and banks as to the value of cargoes due for delivery before, but which arrived after one of the devaluations.

As a result of the confusion in the market, banks have also become reluctant to issue new L/Cs to some traders.

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