The Nigerian National Petroleum Company (NNPC) Limited has admitted to facing financial strain due to the cost of supplying Premium Motor Spirit (PMS), popularly known as fuel or petrol.
TheNewsGuru.com (TNG) reports Olufemi Soneye, Chief Corporate Communications Officer of NNPC Limited made this known in a statement on Sunday.
Soneye disclosed in the statement that the financial strain has placed considerable pressure on the company and poses a threat to the sustainability of fuel supply across the country.
The statement reads: “NNPC Ltd. has acknowledged recent reports in national newspapers regarding the company’s significant debt to petrol suppliers. This financial strain has placed considerable pressure on the Company and poses a threat to the sustainability of fuel supply.
“In line with the Petroleum Industry Act (PIA), NNPC Ltd. remains dedicated to its role as the supplier of last resort, ensuring national energy security. We are actively collaborating with relevant government agencies and other stakeholders to maintain a consistent supply of petroleum products nationwide”.
TNG reports fuel queues have refused to cede to any intervention, especially in Lagos State and in Abuja, the federal capital territory (FCT), with the NNPC at a point, blaming the queues on the rainy season.
Industry experts had disclosed that the landing cost of petrol as of the end of July 2024 was N1,100 per litre, excluding the additional costs of transporting the product to retail outlets. The official pump price of petrol is about N600/litre. The experts in the energy sector argued how the increasing landing cost of petrol could lead to an upward adjustment of pump prices by marketers.
Recall that the federal government had instructed the NNPC Limited not to sell PMS above “a certain regulated price” as contained in the audited financial statements of NNPC Limited released for the year ended 31 December 2023.
NNPC in the financial statements noted that the cost of importing PMS is usually much higher than the regulated price. The company described the difference between the cost of importing PMS and the regulated price as under recovery or “shortfall”.
Checks carried out by TNG on the audited financial statements released by NNPC Limited reveal PMS under recovery and energy security expenses grossing N3 trillion for the year ended 31 December 2023. A forecast by NNPC Limited had shown that the cumulative PMS under recovery from August 2023 will hit N6.884 trillion by December 2024.
Further checks reveal that as of the end of December 2023, the Nigerian government was yet to defray the sum of N4.8 trillion to NNPC Limited. The government has only defrayed the sum of N649.4 billion.
Although President Bola Tinubu announced the removal of fuel subsidy during his inaugural address on May 29, 2023, there is now overwhelming evidence that the government still spends billions on subsidy. However, the federal government had consistently denied this and the NNPC has said the FG is owing.