The Nigerian National Petroleum Company Limited has confirmed that the Federal Government is subsidizing the petrol it imports into the country.
While the NNPCL has not directly paid fuel subsidies to marketers over the past nine months, it acknowledged that the government permits the company to sell petrol at prices below the landing cost.
According to The PUNCH, this clarification was provided by the Chief Financial Officer of NNPCL, Alhaji Umar Ajiya, during a press briefing on Monday in Abuja.
Ajiya emphasized that the NNPCL’s role is to manage the shortfalls in petrol importation on behalf of the federation.
“In the last eight to nine months, NNPCL has not paid anybody a dime as a subsidy; no one has been paid kobo by NNPCL in the name of subsidy. No marketer has received any money from us by way of subsidy,” Ajiya stated.
He further explained that the NNPCL imports Premium Motor Spirit at a specific cost, but the government mandates the company to sell it at a reduced price, creating a shortfall.
“And the deal is between the Federation and NNPCL to reconcile. Sometimes, they give us money, so there is no money exchanging hands with any marketer in the name of subsidy,” he added.
Ajiya also noted that credit lines are a common practice in the downstream oil sector, consistent with global commercial norms.
Historically, the NNPCL has maintained open credit agreements with PMS suppliers, operating on term-line contracts for payments.
The Executive Vice President of Downstream at NNPCL, Dapo Segun, highlighted the significance of these open credit agreements, pointing to the trust and credibility that the national oil company has established with its suppliers over the years.
Segun refuted claims that NNPCL owes $6.8 billion to suppliers, suggesting that the actual figure is much lower.
“What really matters is the relationship between us and our suppliers to ensure that we keep faith in making these payments to our suppliers, which we have done over time,” Segun explained.
He described the financial dynamics between NNPCL and its suppliers as fluid, with the outstanding balance fluctuating as payments are made and new supplies are delivered.
“The most important thing is to ensure that we continue to make PMS available across the country,” Segun stressed.
Despite repeated denials from the Federal Government regarding the payment of petrol subsidies, major marketers have reported that the landing cost of petrol has exceeded N1,000 per liter.
As the sole importer of petrol, the Federal Government effectively subsidizes the fuel by paying the NNPCL to sell it at a lower rate to Nigerians.
This arrangement, however, has contributed to ongoing fuel shortages across the nation, prompting experts to call for an end to fuel importation and the establishment of more sustainable solutions to meet the country’s energy needs.
