The Chief Financial Officer (CFO) of the Nigerian National Petroleum Company Limited (NNPCL), Umar Ajiya, has disclosed that the company remitted zero funds to the Federation Account in 2022.
The absence of remittances was attributed to the payment of subsidies on Premium Motor Spirit (PMS), commonly known as petrol. Ajiya explained in a video released by the oil major that the payment of fuel subsidies hindered NNPCL from remitting taxes, royalties, and making profits.
The CFO elaborated on the challenges faced by NNPCL, stating, “The lingering constraint of fuel subsidy payment hampered its (NNPCL) growth potential until a new administration emerged, bringing an end to the subsidy regime and saving the company from bankruptcy and setting it on a path of financial prosperity.” He added that the removal of the subsidy allowed the company to grow its profit from N674.1 billion in 2021 to N2.54 trillion by the third quarter of 2022.
President Bola Tinubu declared the end of the subsidy regime in his inaugural speech on May 29, 2023, which was promptly enforced by NNPCL the following day. Ajiya emphasized that the removal of the subsidy had saved the nation N400 billion on average every month.
Fuel subsidy costs exceeded N3.3 trillion in 2022, and its removal led to a significant increase in the cost of petrol by over 250 percent. Despite the initial challenges, Ajiya confirmed that NNPCL has resumed remittances to the Federation Account, paying dividends and fulfilling tax and royalty obligations.
The documentary released by NNPCL further highlighted that the end of the subsidy enabled the company to contribute N4.5 trillion to the Federation Account in the first nine months of 2023. The report detailed the company’s expenditures, including general and administrative charges, security expenses, entertainment expenses, employee benefit expenses, and various other categories.
The NNPCL Group generated a revenue of N8.82 trillion in 16 months, while the company made N2.9 trillion from September 2021 to December 2022. Profit, income tax credits, and comprehensive income figures were also outlined for both the NNPCL Group and the NNPCL Company in the report.
