EXCLUSIVE: Subsidy payments gulped N1.82trn in five months, arrears hit N3.73trn

The Nigerian National Petroleum Company (NNPC) Limited says it paid N307.408 billion as petrol subsidy payment in May 2023.

The national company disclosed this in its monthly presentation to the federation account allocation committee (FAAC) meeting on June 22, 2023.

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

From January 2023 to May 2023, petrol under-recovery totalled N1.828 trillion — 55 percent higher than the amount paid in the corresponding period of 2022.

Subsidy payments gulped N274.769 billion in January 2023, N477.742 billion in February, N415.381 billion in March, and N353.130 billion in April, respectively.

Meanwhile, under-recovery arrears amounted to N3.735 trillion and has been “carried forward”, the state oil firm said.

“The May 2023 subsidy amounted to N307,408,874,345.82, thus, the outstanding balance carried forward is N3,735,689,387,761.22 as of June 2023 FAAC,” the document reads.

“The sum of N495,497,600,000 was recovered from FGN/CBN subsidy support.”

According to NNPC, the recovery consists of N400 billion from Central Bank of Nigeria (CBN) and federal government subsidy support as well as “$220,000 (80 percent of $275,000) Nigeria liquefied natural gas dividend”. 

The NLNG dividend is converted at N434.08/$1, which is the FAAC-approved exchange rate for May 2023, NNPC said. 

The NNPC said it raked in N47.57 billion as domestic production sharing contract (PSC) crude oil and gas revenue in May 2023.

TheCable observed that NNPC’s summary of revenue and distribution made no reference to its FAAC remittances.

In July 2022, the national oil company transitioned to a limited liability company.

Speaking during the transition event, Punch reported that Mele Kyari, group chief executive officer (GCEO), NNPC Limited, said the firm was now a private entity and had nothing to do with FAAC anymore.

Responding to a question on what would happen to NNPC’s monthly FAAC contributions, kyari replied, “We are now a private company; would MTN go to FAAC?”

In the same month, Kyari had said the oil company would charge the federal government a fee to carry out petrol subsidy payments.

PETROL SUBSIDY REMOVAL AND TINUBU’S ADMINISTRATION

In his inaugural speech on May 29, President Bola Tinubu declared that the petrol subsidy payments had stopped — a pronouncement that set in post-subsidy realities immediately.

The president, on Saturday, admitted that the speech was unplanned, a revelation that has sparked fresh debates on the federal government’s readiness to scrap under-recovery payments.

Still, after the presidential declaration, NNPC announced the adjustment of the pump price across its retail outlets nationwide.

Justifying the act, Kyari said the federal government has not funded the petrol subsidies for 2022 and 2023, despite budgetary provisions.

“Absolutely, there is a provision in the budget but you do not have the cash to back it up or you also don’t have the fiscal obligation that should have come for the NNPC to settle for this and this definitely means that there is provision for the end of June, according to the appropriation act but you can’t give what you don’t have,” he had said  

Kyari also said the federal government still owes the firm the sum of N2.8 trillion spent on petrol subsidy.