Between January and May of this year, the Nigerian National Petroleum Company Limited (NNPC) spent N1.301 trillion on subsidies for Premium Motor Spirit, often known as petrol, and refinery renovation.
This was revealed by NNPC in its most recent presentation to the Federation Account Allocation Committee meeting in June 2022.
The majority of the oil company’s spending was on petrol subsidies, which totaled N1.274tn for the five months, while refinery renovation cost N9.11bn in each of January, March, and April, totaling N27.33bn. An examination of NNPC’s monthly fuel subsidy costs revealed a consistent increase in the amount incurred as a subsidy by the Federal Government via NNPC.
Data from the national company showed that N210.38bn, N219.78bn, N245.77bn, N271.59bn and N327.1bn were used in subsidising PMS in January, February, March, April and May 2022 respectively. NNPC is the sole importer of petrol into Nigeria for several years running. Nigeria’s four refineries are not working, though the Port Harcourt refinery is currently under rehabilitation.
The national oil company refers to its subsidy spending as under-recovery/value shortfall and deducts it every month before making any remittance to FAAC, a development that has stopped NNPC from remitting anything to the Federation Account this year. In its latest presentation to FAAC, the oil firm also informed the committee that it would deduct N845.15bn from what would be shared by the committee next month.
“The value shortfall on the importation of PMS recovered from May 2022 proceeds is N327,065,907,048.06, while the outstanding balance carried forward is N617bn,” NNPC stated.
It added, “The estimated value shortfall of N845,152,863,012.97 (consisting of arrears of N617bn plus estimated May 2022 value shortfall of N227,721,200,478.23) is to be recovered from June 2022 proceed due for sharing at the July 2022 FAAC meeting.”
The amount spent on petrol subsidy monthly has been depleting the revenues accruable to the Federation Account and limiting the funds being shared by the three tiers of government.
The amount spent as subsidy by the Federal Government on every litre of petrol consumed in Nigeria was currently above N600, according to figures from oil sector operators. The report also revealed that the latest PMS evacuation data from NNPC showed that the year-to-date daily consumption of petrol in Nigeria was 66.8 million litres.
It stated that based on the above figure, it, therefore, implied that the Federal Government would be spending about N40.1bn daily when subsidising every litre of petrol consumed in Nigeria by at least N600.
The huge spending on subsidies had made experts and operators intensify the call for the fast rehabilitation of Nigeria’s refineries.