The Nigerian National Petroleum Company Limited (NNPCL) has decried the staggering amount of money it pumps monthly into fuel subsidy payments.
The NNPCL Group Chief Executive, Mele Kyari, said Friday that the Corporation’s cash flow is being severely impacted by over N400 billion it is paying monthly to subsidize Premium Motor Spirit.
Kyari, who made this known during the final cutover to NNPC Ltd from being a corporation, said the company is paying nearly double the price it sells to marketers. He said the payments, which cover 66 million liters per day at the cost of N202 per liter, are being financed by NNPCL even though there is provision for that in the Budget.
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“Today, by law and the provisions of the Appropriation Act, there is a subsidy on the supply of petroleum products, particularly PMS imports into our country. In current data terms, three days ago, the landing cost was around N315/liter.
“Our customers are here; we are transferring to each of them at N113/liter. That means there is a difference of close to N202 for every liter of PMS we import into this country. In computation, N202 multiplied by 66.5 million liters, multiplied by 30 will give you over N400bn of subsidy every month,” the Punch quoted Kyari saying.
He disclosed that despite being budgeted for, the NNPCL has continued to fund the subsidy without refund from the Federal Ministry of Finance, Budget and National Planning.
“But there is a budget provision for it (subsidy). 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,” he said.
President Muhammadu Buhari unveiled the NNPCL in July last year, making the NNPC a limited liability entity in line with the provisions of the Petroleum Industry Act (PIA).
The goal is to make the Corporation a profitable commercial entity, generating revenue like its peers around the world.
“NNPC Limited will operate as a commercial, independent and viable National Oil Company (NOC) at par with its peers around the world, to sustainably deliver value to its over 200 million shareholders and the global energy community, while adhering to its fundamental corporate values of integrity, excellence and sustainability,” Buhari said.
However, under the PIA, the NNPCL also has the responsibility to ensure that there is enough supply of petroleum products in Nigeria.
“NNPC Limited is mandated by law to ensure Nigeria’s national energy security is guaranteed to support sustainable growth across other sectors of the economy as it delivers energy to the world,” Buhari added during the inauguration of the NNPCL.
Before it became a limited liability company, the NNPC was the sole importer of petroleum products in Nigeria. It previously was importing 90% of the PMS consumed in Nigeria before it took the role to 100% in 2017, due to forex strains curtailing marketers’ capacity to import enough for the country.
However, pumping PMS at subsidized rates while operating as a limited liability company stands against NNPCL’s prospect of being profitable, particularly in the face of rising oil prices.