CBN’s New CRR Policy Hinders Petroleum Marketers’ Financing For Dangote Refinery Products

Many petroleum products marketers are currently facing difficulty in getting loans needed to finance the lifting of diesel and aviation fuel in larger volumes from the Dangote Refinery due to the new 45 percent Cash Reserve Ratio (CRR) recently introduced by the Central Bank of Nigeria (CBN).

It was gathered that the challenge from the increased CRR has allegedly hampered the ability of commercial banks to lend up to N15 billion to enable marketers purchase petroleum products from Dangote Refinery with cargoes.

This, according to industry sources, was contributing to why products from the local refinery had been slow in saturating filling stations across the country.

The Executive Director of Operations at Masters Energy Oil & Gas Limited, Mr. Felix Eribo, told THISDAY that the company had been getting offers from Dangote Refinery but that the company had not started lifting products from them in vessels due to the lack of adequate funding.

He said the banks are now handicapped to lend huge amounts that would enable marketers to buy large volumes of products with vessels from the Lekki Free Trade Zone-based 650, 000 barrels per day refining facility.

The CRR is the minimum amount banks and merchant banks are expected to retain with the CBN from customer deposits and it carries no interest and is not available for use by the banks in their day-to-day operations.

It is one of the ways CBN regulates the country’s money supply, inflation level and liquidity in the country. The higher the rate, the lower the liquidity with the banks.

In early 2020, the apex bank’s Monetary Policy Committee (MPC) had increased CRR by five percent from 22.5 percent to 27.5 percent and in September 2022, it moved it to 32.5 percent in a move to tame inflationary pressure.

However, the MPC at the first meeting in 2024, increased CRR to 45.00 percent amid double-digit inflation rate.

But Eribo observed that the increased CRR has diminished banks’ ability to lend huge amounts of money that would enable marketers to flood the retail outlets with Dangote products.

”We have continued to get the offer but we have not started lifting with vessels, we are just buying with trucks. I was just discussing with them.

“The problem most of the marketers are having is this bank issue where CBN is making it difficult for banks to extend lending to buy full cargo.

“It’s because of this CRR that they introduced -the 45 percent CRR. It’s seriously giving banks problem. So, they now have this singular obligor problem. Some of those banks are finding it difficult to cough out N14 billion to N15 billion to give to marketers”, the Masters Energy director stated.

But in the midst of the funding constraint, he said his company was working around it and would lift products with vessels in no time.

He disclosed that Dangote Refinery allocated Masters Energy two million litres of diesel three weeks ago.

”So, right now, we are just using trucks to lift products from the refinery. They gave us two million litres last three weeks”, he said. 

In terms of quality of product from the refinery, Eribo said it met Nigerian standards.

“What matters is that it meets Nigerian standard. Once it meets Nigerian standard, that’s not an issue again. We call it DPR Standard, once it meets their standard, it’s okay.

“Customers have not complained about the quality. You know when you have alternative, that’s when you have complaint. But I know they will meet up, they will keep improving,” he added.

Peter Uzoho

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