EXCLUSIVE: Petrol subsidy gulped N714bn in seven months

Petrol subsidy payments gulped N714 billion in the last seven months, shrinking monthly revenue accrued to the federation account.

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

The document exclusively obtained by TheCable showed that the country spent a total of N714.79 billion year-to-date to cater for the cost of petroleum shortfall, also known as under-recovery.

According to the document detailing the national oil company’s presentation at the September 2021 Federation Account Allocation Committee (FAAC) meeting, NNPC paid N25.37 billion in February for the under-recovery of PMS/value shortfall. It also expended N60.39 billion in March, 61.99 billion in April, N126.29 billion in May and N164.33 billion in June for the same purpose.

At the end of July and August, it paid N103.28 billion and 173.13 billion, respectively.

The Nigerian National Petroleum Corporation (NNPC), which is currently the sole importer of petrol, has been deducting subsidy payments from oil and gas proceeds due to the three tiers of government since it is not catered for in the 2021 budget.

The deductions have become the biggest factor contributing to dwindling federal allocations to government accounts, according to the NNPC document.

For instance, in August, the NNPC made a gross revenue of N389.12 billion — from which it paid N173.13 billion to settle the subsidy payment for the month. In the same month, only a meagre N80 billion was available to the federation account after deductions of other costs.

In April, TheCable exclusively reported that subsidy cost made the corporation not make any remittance to the FAAC in May.

The document showed that between January and August, the corporation made a contribution of N429 billion to the federal, state and local governments with a deficit of N1.25 trillion.