FG Owes NNPC N7.8 Trillion in Subsidy Payments in 2024, NNPC Official Confirms
- The Nigerian government owes the NNPC about N7.8 trillion in subsidy payments in August
- The company’s Chief Financial Officer, Umar Ajiya, disclosed this during the presentation of NNPC’s financial results
- He said the amount is a shortfall in petrol import payments the government should pay to the NNPC
Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.
The Nigerian government reportedly owes the Nigerian National Petroleum Company Limited about N7.8 trillion or $4.6 billion in subsidy payments this year alone.
NNPC’s Chief Financial Officer, Umar Ajiya, disclosed that the debt is a shortfall of what the company hopes to collect from the federal government in August.
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FG to offset N2.2 trillion of NNPC debt
Reports say the federal government has projected to earn about N19.4 trillion in revenue this year.
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The subsidy regime, which President Bola Tinubu ended in May 2024, was reportedly reintroduced to cushion the effect of inflation, which now stands at 33.40% as of July 2024.
The Nigerian government has maintained that it has scrapped subsidies. However, Ajiya calls the debt shortfall and not a subsidy.
He said the Nigerian government would allow the national oil firm to offset about N2.2 trillion of its debt.
Petrol landing costs rise above N1,000 per litre
According to Bloomberg, Ajiya disclosed this after the NNPC released its financial results in Abuja.
The government accumulated the debt to NNPC because the company remains the sole importer of petroleum products. It sells to marketers at below-the-market rates to keep pump prices low.
Experts say the subsidy was reintroduced following the increase in the landing cost of petrol above N1,000 per litre.
At NNPC retail stations, petrol is sold for about N617 per litre, compared to over N1,000 in neighbouring countries, leading to cross-border smuggling.
NNPC reports an increase in profit
NNPC reported an annual pre-tax profit of N3.3 trillion against the N2.55 trillion reported the previous year.
Ajiya said the company plans to invest about $6.6 billion in its operations this year, mostly from borrowed funds.
The company has projected a rise of two million barrels per day by the end of the year, up from an average of 1.75 million barrels per day in August.
The Nigerian government asked the national oil firm to defray part of the subsidy costs using its dividend accrued to the government.
NNPC speaks on the 'return of subsidy'
Legit.ng previously reported that contrary to speculations that President Bola Tinubu had asked the NNPCL to use its dividends to defray subsidy costs, the company has refuted claims on the return of subsidies.
In a statement on X, the group chief executive officer of NNPC Ltd, Mele Kyari, insisted that there are no subsidy payments but that the company is recovering its fuel costs from the federal government.
Reports had emerged that President Tinubu asked the national oil firm to use its dividends to pay for the petrol subsidy following NNPC's request that the government repay the FX differential used for petrol imports.
Proofread by Kola Muhammed, journalist and copyeditor at Legit.ng
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Source: Legit.ng
