EXCLUSIVE: NNPC declares zero FAAC remittance for eighth time as subsidy gulps N2.6trn

The Nigerian National Petroleum Company (NNPC) Limited says it deducted N525.71 billion as a shortfall for the importation of petrol (subsidy) in August 2022.

Subsidy or under-recovery is the underpriced sales of premium motor spirit (PMS), better known as petrol.

The national oil company said this in its monthly presentation to the Federation Account Allocation Committee (FAAC) meeting on Friday, September 23.

The FAAC document obtained by TheCable showed that due to the subsidy payment, the oil company failed to remit any funds to the federation account for the eighth consecutive time.

Analysis by TheCable Index showed that NNPC had spent N2.565 trillion on petrol subsidy payments since the beginning of the year.

“The sum of N525,714,373,874.60 being federation account share was used to defray value shortfall/subsidy for the month,” NNPC Limited said.

“The value shortfall on the importation of PMS recovered from August 2022 proceeds is N525,714,373,874.60 while the outstanding balance carried forward is N983,365,057,776,20.

“The sum of N525,714,373,874.60 applied to defray value shortfall/subsidy is made up of $2,337,591.52 being 40 percent of PSC.”

Petrol subsidy has remained a controversial issue in Nigeria as spending continues to deplete the country’s revenue.

In January, February, March, and April 2022, the petrol subsidy gulped 210.38 billion, N219.78 billion, N245.77 billion, and N271.13 billion, respectively. Also, in May, June, and July, the country spent N327.07 billion and N319.18 billion, and N448.78 billion, respectively.

This year, the federal government plans to spend up to N4 trillion on costly petrol subsidies due to high global oil prices.

However, it plans to stop subsidy payment by June next — with plans to spend N3.35 trillion as contained in the 2023-2035 medium-term expenditure framework and fiscal strategy paper (MTEF&FSP).

The oil company said it recorded an overall crude oil lifting of 8.49 million barrels (export and domestic crude) in July 2022, representing a 16.78 increase compared to the 7.27 million barrels it lifted in June 2022.

“Production in July 2022 averaged 1.183 barrels per day (OPEC),” it added.