A dearth of letters of credit (L/Cs) in Nigeria is one of the reasons why the country is currently experiencing fuel shortages.

The lack of L/Cs is apparently a result of bank concerns over the ability of fuel importers who are under investigation to meet their L/C obligations.

Stakeholder concerns

A probe into the management of fuel subsidies has been ordered by Nigeria's legislature, the National Assembly.

But stakeholders in the fuel distribution sector, including the Petroleum Products Pricing and Regulatory Agency (PPPRA), are blaming fuel scarcity in parts of the country on the probes.

L/C difficulties

The agency's executive secretary, Stanley Reginald, argues that the major challenge now facing the PPPRA is a reduction of the number of those involved in the importation of fuel.

Reginald reckons this is because many fuel importers are finding it difficult to raise L/Cs from banks for fuel imports as a result of the subsidy probe and uncertainty over its outcome.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.