A new report has disclosed that the Nigerian National Petroleum Corporation Limited, NNPCL paid a subsidy of N600 on every litre of petrol consumed by Nigerians in the past 12 months.
Recall that President Bola Tinubu had in his inauguration speech on May 29, 2023, declared that subsidy payment was gone. Also, according to the 2024 Appropriation Act, payment of subsidy by the Federal Government ended by June 2023.
However, according to the news website, Platform Africa, NNPCL has continued to bear the subsidy burden.
“For several years now, NNPC stopped remitting the federation account as the money was used in what it called under-recovery. This is in a bid to stabilize the pump price of petrol.
“This is obviously a humongous burden for one company to bear if multiplied by the millions of litres of petrol consumed daily in the country,” Platform Africa stated.
“Before the ‘subsidy is gone’ declaration by President Tinubu, and the subsequent continued payment of under-recovery by the NNPCL, this burden was being shared by the government through its monthly allocations.
“Now, NNPC alone bears the load.
“Since the announcement of the removal of subsidy, the amount available for sharing among the Federal Government and the other two tiers of government ballooned exponentially.
“Figures for 2023 show that the States shared a whopping N3 trillion. With projections from the 2024 approved budget indicating that they are poised to receive N2.4 trillion more than they did in 2023.
“The bulk of this revenue shared at FAAC meetings by the tiers of government come from activities of NNPCL. Which dovetail into oil exports, taxes, and other statutory allocations,” Platform Africa said.
“In spite of the burden, the state-owned oil company was able to declare a record N3.3 trillion in net profit. And revenue of N27.99 trillion in its 2023 financial report.
Recall that in its recent statement, NNPCL, stated that it was under ‘financial strain’. It noted that would affect its primary role of stabilizing fuel supply.
“The company is said to have a debt overhang of $6 billion. Which poses an existential threat to the operations of the company, increasing significantly its debt overhang.
“Investigations show that the debt burden on the NNPCL will cross the $10 billion mark by the second quarter of 2025. This is barring the adjustment in the present Nigerian financial structure.
“The national oil company had, after a long period of silence, on Monday admitted that it was owing importers of Premium Motor Spirit (PMS) $6 billion.
“Documents detailing deals between the company and some partners showed that the $6 billion debts would soon be dwarfed. This is as the Nigerian state continues to push the burden of differentials between the landing cost and pump price of the product to it.
“Already, the under-recovery for the last quarter (September to December) of 2024 is expected to push the total spending on differentials above N6 trillion, according to the supplementary budget for the year.
“At current rates, expenditure on fuel subsidy was, according to the initial projection by the Ministry of Finance, expected to reach N5.4 trillion by the end of 2024,” the report stated.
source: Blueprint
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