NNPCL Confirms Federal Government’s Role in Subsidizing Petrol Amid Nationwide Shortfalls

The Nigerian National Petroleum Company Limited (NNPCL) has confirmed that the Federal Government continues to subsidize petrol imported into the country. Despite recent denials of paying fuel subsidies to marketers over the past nine months, the NNPCL disclosed that it has been selling petrol at a price below its landing cost, as directed by the government.....KINDLY READ THE FULL STORY HERE▶

Subsidy Confusion Clarified

Speaking in Abuja, the company’s Chief Financial Officer, Alhaji Umar Ajiya, clarified the situation. Ajiya emphasized that no direct payments have been made by the NNPCL to marketers under the guise of subsidies in the last eight to nine months. Instead, the government has instructed the NNPCL to sell petrol at a price significantly lower than the actual landing cost, with the shortfall being reconciled between the company and the federal government.

“In the last eight to nine months, NNPCL has not paid anybody a dime as a subsidy; no one has been paid kobo by NNPCL in the name of subsidy. No marketer has received any money from us by way of subsidy,” Ajiya stated. He further explained that the NNPCL has been handling the importation of Premium Motor Spirit (PMS) and selling it at a government-mandated price, with the difference being managed between the Federation and the NNPCL.

Financial Arrangements and Supplier Relations

NNPC also highlighted that credit lines are common in downstream businesses, aligning with global commercial practices. In line with this, the NNPCL has maintained open credit agreements with PMS suppliers, allowing for a dynamic payment process.

Dapo Segun, the Executive Vice President of downstream at NNPCL, added that the company’s established credibility has facilitated these credit agreements. While addressing concerns about the company’s outstanding payments to suppliers, Segun assured that the amount owed is not as high as previously reported, refuting claims of a $6.8 billion debt.

“The relationship between us and our suppliers is crucial to ensure that we keep faith in making these payments, which we have done over time,” Segun remarked. He explained that the outstanding figure fluctuates based on the timing of payments and product supplies, emphasizing the NNPCL’s commitment to maintaining a steady supply of PMS across Nigeria.

Government’s Stance on Fuel Subsidies

Despite the Federal Government’s repeated denials of subsidizing petrol, major marketers have pointed out that the landing cost of petrol currently exceeds N1,000 per litre. As the sole importer of petrol, the government compensates the NNPCL to provide fuel to Nigerians at a subsidized rate.

However, this arrangement has contributed to frequent fuel shortages across the nation. Experts are increasingly calling for an end to fuel importation and a transition to a more sustainable solution for meeting Nigeria’s energy needs.