The Nigerian National Petroleum Company (NNPC) says it is selling petrol, also known as premium motor spirit (PMS), at only half the landing cost.
Umar Ajiya, the chief financial officer (CFO) of the NNPC, told NAN in Abuja on Monday that the national oil company is only bearing what he called the “shortfall” and not a subsidy.
The official pump price of petrol is around N600/litre, but the landing cost is around N1,200, and Ajiya confirmed to Bloomberg that the NNPC spent N7.8 trillion to cover the “shortfall” in the first seven months of the year.
The term “subsidy” is used extensively in official communication between NNPC and President Bola Tinubu, as seen by TheCable, to explain the “shortfall.”
Tinubu had recently approved a request by NNPC to utilise the 2023 final dividends due to the federation to pay for the subsidy.
However, Ajiya sought to deny the story during a media briefing on the company’s 2023 audited financial statements earlier on Monday, saying the company was only “taking care of the shortfall on petrol importation between it and the federation.”
Ajiya told Bloomberg that NNPC is owed N7.8 trillion ($4.9 billion) by the government in subsidy debts from January to July 2024.
However, in his “clarification” to NAN, Ajiya stated that no subsidy has been paid to any marketer in the last nine years, which is understandable given that NNPC is the sole importer of petrol through contracts with suppliers.
“In the last eight to nine years, NNPC Ltd. has not paid anybody a dime as a subsidy; no one has been paid a kobo by NNPC Ltd. in the name of subsidy,” Ajiya said.
“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 specific cost price, and the government tells us to sell it at half price.
“So the difference between the landing price and that half price is a shortfall.
“And the deal is between the Federation and NNPC Ltd., to reconcile; sometimes they give us money, so there is no money exchanging hands with any marketer in the name of subsidy.”
He did not specify how much of the $4.9 billion could have gone into the federation account if the NNPC had not paid for the “shortfall.”
