The Nigerian National Petroleum Company (NNPC) Ltd has clarified that it is currently selling petrol (Premium Motor Spirit, PMS) at half of its actual landing cost, not offering a subsidy.
Speaking in Abuja on Monday, NNPC’s Chief Financial Officer, Umar Ajiya, explained that the company is covering what he described as a “shortfall” rather than providing a traditional subsidy.
Ajiya disclosed that while the official pump price of petrol is around ₦600 per litre, the real landing cost is approximately ₦1,200 per litre. He revealed that NNPC has spent ₦7.8 trillion in the first seven months of 2024 to manage this shortfall.
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EKO HOT BLOG reports that although internal communications between NNPC and the presidency, referred to this shortfall as a “subsidy,” Ajiya denied this characterization during a media briefing on the company’s 2023 audited financial statements.
He emphasized that NNPC is merely handling the cost difference between the landing cost and the pump price in collaboration with the Federation.
Ajiya also clarified that no payments have been made to any marketers in the last eight to nine months under the pretense of a subsidy.
“He stated, “In the last eight to nine months, NNPC Ltd. has not paid anyone a dime as a subsidy; no one has received a kobo from NNPC Ltd. under 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 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.”
Ajiya did not address how much of the $4.9 billion covering the shortfall could have gone into the federation account if not for these payments.
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It is speculated that the All Progressives Congress (APC) government is avoiding the term “subsidy” due to the negative connotations associated with it, especially since the “subsidy scam” was a major issue during its campaign to unseat the Peoples Democratic Party (PDP) in 2015.
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