The Nigerian National Petroleum Company’s (NNPC) outstanding debt on what it considers under-recovery topped N1.044 trillion in July, with total spending on the contentious gasoline subsidy already exceeding oil income.
According to data from the National Oil Company (NOC) that was released late yesterday, the company also withheld N448.7 billion in July for the purpose, setting a record high since the return of subsidy payments early last year.
There was no revenue from crude oil exports, according to the paper outlining the NNPC presentation to the Federation Account Allocation Committee (FAAC) last week.The absence of any money from crude exports was not explained. Furthermore, a tie-back to June showed that the overall NNPC crude oil lifting for the sixth month in terms of export and domestic, was 7.27 million barrels, a decrease of 18.68 per cent relative to 8.94 million barrels lifted in May.
In the whole of July, it also showed that just about N400 billion was the gross domestic crude oil and gas receipts.
This implies that the amount spent on petrol subsidy for the month exceeded the total oil sold for the month by roughly N48 billion. In addition, Nigeria’s LNG feedstock gas receipt was $93.88 million, inclusive of $9.39 million arrears, with $2.04 million being miscellaneous receipts, the NNPC document stated.
“The sum of N400,469,663,160.14 is the gross domestic crude oil and gas revenue for July 2022.
“The value shortfall on the importation of Premium Motor Spirit or petrol recovered from July 2022 proceeds is N448,782,119,154.91, while the outstanding balance carried forward is N1.044,514,420,619.13,” the data showed.
Also, as it has been done since this year, the NNPCL did not remit a kobo to the federation account. The column for that purpose has now been deleted from the document. This may not be unconnected with the company’s recent ‘commercialisation’.
For the whole of the month, no project outlined by the NOC was paid for, aside from the one for a subsidy,
Some of the regular calendared payments by the NNPCL include those for national domestic gas development, frontier exploration services and renewable energy development.
Others, according to the document signed by Nasir Usman on behalf of the Chief Financial Officer NNPC, include refinery rehabilitation, and the Nigeria-Morroco pipeline, among others.
In the first half of 2022, petrol subsidy claims surpassed oil and gas revenue by a whopping N210 billion, with the NNPC recording N2.39 trillion as gross revenue from oil and gas receipts, while subsidy claims amounted to N2.6 trillion.
The data further revealed that N1.59 trillion was used to cover part of the subsidy costs in the last six months, leaving an outstanding balance of N1.01 trillion.
Nigeria is currently facing an economic crisis with rising debt servicing costs and fuel subsidy payments, which from all indications could exceed the budgeted N4 trillion this year as well as a massive drawdown on its Excess Crude Account (ECA).
Coupled with that, it has for the first time in recent history been unable to take advantage of rising international oil prices because it cannot meet its Organisation of Petroleum Exporting Countries (OPEC) production quota. Crude oil has sold for above $100 for most of this year.
An analysis of the latest material released by the NNPCL last night indicated that in January, February and March 2022, petrol subsidy payments gulped N210.38 billion, N219.78 billion, and N245.77 billion, respectively while in April, Nigeria spent N271 billion and N327.07 billion in May 2022 to cater for the shortfall of the importation of petrol.
For June, the national oil company deducted N319.18 billion from the federation account as payment for petrol subsidy, even as it hit a record N448.7 billion in the latest version of the document.
To compound the current subsidy crisis, Nigeria does not know its exact daily consumption of petrol and is believed to be subsidising neighbouring countries due to the arbitrage created by the subsidy in Nigeria.
The problem is expected to even worsen in 2023 with a current projection of as much as N6.72 trillion by the country in its 2023-2035 medium-term expenditure framework & fiscal strategy paper (MTEF&FSP).
