It is not subsidy, it is importation shortfall – NNPCL opens up

The Nigerian National Petroleum Company Limited (NNPC Limited) has disclosed it has not paid fuel subsidy to anybody in the last nine months.

TheNewsGuru.com (TNG) reports Chief Financial Officer of NNPC Limited, Alhaji Umar Ajiya made the disclosure on Monday in Abuja.

TheCable had reported President Bola Tinubu gave approval for a request by NNPC Limited to utilise the 2023 final dividends due to the federation to pay for petrol subsidy. A forecast by NNPC Limited seen by the newspaper showed that the cumulative petrol subsidy bill from August 2023 will hit N6.884 trillion by December 2024, leaving the national oil company unable to remit N3.987 trillion in taxes and royalties to the federation account.

However, Ajiya clarified NNPC Limited was only taking care of Premium Motor Spirit (PMS) importation shortfalls between the company and the federation.

“In the last eight to nine months, the NNPC Limited has not paid anybody a dime as subsidy, no one has been paid kobo by the NNPC Limited in the name of subsidy.

“No marketer has received any money from us by way of subsidy. What has been happening is that we have been importing PMS, which has been landing at a certain cost price and government tells us to sell it at half price.

“So the difference between the landing price and that half price is what we call shortfall. And the deal is between the Federation and NNPC Limited. To reconcile, sometimes they give us money. So, there is no money exchanging hands with any marketer in the name of subsidy,” he said.

According to him, credit lines are prevalent in the downstream business based on the world wide commercial system, adding that the company was in an open credit agreement with PMS suppliers in the past, with term lines agreement for payment.

Also, Dapi Segun  the Executive Vice President, Downstream, NNPC Limited, said that establishing an open credit agreement with suppliers spoke volume of the credibility which the national oil company had built over a period of time.

“Concerning the outstanding to the suppliers, it is not in that magnitude that has been put out, it is actually lower than the N6.8 billion.

“What matters really is the relationship between us and our suppliers to ensure that we keep faith in making these payments to our suppliers which we have done overtime.

“You would understand that it is not a static figure and I wouldn’t want to be quoting any figure, when we make payments it goes down, when they supply products it goes up.

“It is a dynamic way, but the most important thing is to ensure that we continue to make PMS available across the country,” he said.