The Nigerian National Petroleum Company Limited (NNPCL) on Friday announced that the country is spending over N400 billion monthly on petroleum subsidy.
The NNPC Group Chief Executive Officer, Mele Kyari, disclosed this at the final cutover ceremony of NNPC and the birth of NNPCL at the corporation’s towers in Abuja.
Mr Kyari noted that NNPCL is the sole importer of petrol into Nigeria and has continued to play this role for several years running, bearing the huge cost of fuel subsidy.
According to him, other private oil marketers stopped importing petrol into Nigeria due to the difficulty encountered in accessing the United States dollars, required for the import of Petroleum Motor Spirit (PMS).
“Today, by law and the provisions of the Appropriation Act, there is a subsidy on the supply of petroleum products, particularly PMS, into our country. In current data terms, three days ago the landing cost was around N315/litre,” he said.
“Our customers are here, we are transferring to each of them at N113 per litre. That means there is a difference of close to N202 for every litre of PMS we import into this country.
“In computation, N202 multiplied by 66.5 million litres, multiplied by 30 will give you over N 400 billion of subsidy every month.”
Mr Kyari said that the funding of petrol subsidy by NNPCL had been ongoing without refunds from the Federal Ministry of Finance, Budget and National Planning, despite being budgeted for in the appropriation act.
“There is a budget provision for it. Our country has decided to do this. So, we are happy to deliver this, but it is also a drain on our cash flow, and I must emphasize this.
“For as we continue to support this, you will agree with me that it will be extremely challenging for us to continue to fund this from the cash flow of the company when you do not get refunds from the Ministry of Finance,” he said.
He assured that the company would continue to support the country and deliver energy security.
The Nigerian government has for decades subsidised fuel and fixed retail prices of petroleum products.
But in November 2021, the federal government announced its plan to remove the fuel subsidy and replace it with a monthly N5,000 transport grant for poor Nigerians.
Later in the month, the government suspended its planned removal of subsidy after the Nigeria Labour Congress (NLC) and Trade Union Congress (TUC) threatened to embark on mass protests.
The government said it will retain fuel subsidy indefinitely and will work on amending the 2022 budget to provide funds for that purpose.
The government added that it would spend N3 trillion on subsidies in 2022.
Last month, Nigeria’s Minister of Finance, Zainab Ahmed, said that it will be more appropriate for the government to begin the implementation of its fuel subsidy policy in the second quarter of the year.
The minister noted that the country needs to exit the fuel subsidy regime because it is a very significant contributory factor to revenue loss.
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