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NNPC Spends $1.3bn on Petrol Subsidy in Six Months

The Nigerian National Petroleum Corporation (NNPC) expended N541.65 billion subsidy on petrol between February and July this year, a document detailing the national oil company’s presentation to the Federation Account

The Nigerian National Petroleum Corporation (NNPC) expended N541.65 billion subsidy on petrol between February and July this year, a document detailing the national oil company’s presentation to the Federation Account Allocation Committee (FAAC) for August 2021, has shown.

The document obtained by THISDAY showed that N25.374 billion was spent on what the corporation terms under-recovery or value shortfall in February, it was N60.39 billion in March and N61.966 billion in April.

It more than doubled to N126.298 billion in May, markedly reduced to N164.337 billion in June, and further came down to N103.286 billion in July.

As a consequence of the payment, the NNPC has been largely unable to fully remit its ‘calendared projected monthly contribution of N209 billion to the joint account since February, with the worst case being in April when it remitted zero amount to FAAC.

On Friday, THISDAY reported that the corporation was again set to deduct about N215.3 billion from its contribution to next month’s joint federation account, being a combination of N175 billion subsidy sum and N40 billion Joint Venture (JV) cost recovery.

The data showed that NNPC paid N67.280 billion to the joint account in July, an improvement on the N47.162 billion in June, with the succeeding month’s payment being about N20 billion higher than that of June.

Furthermore, in January, the net revenue to FAAC by the NNPC was N90.8 billion, it was N64.161 billion in February, N41.184 billion in March, N38.608 billion in May, N47.162 billion in June, and N67.280 billion in July.

 Year-to-date, the document showed that the NNPC had only been able to make a contribution of N349.254 billion to the three tiers of government with a huge deficit of N1.115 trillion.

In all, in July, as released on August, 16 local and international oil trading companies had dealings with the NNPC under the Direct-Sale-Direct-Purchase arrangement in 28 transactions in the month.

NNPC’s profit was N67.2 billion, with contributions from JV crude being N1.632 billion, domiciled crude being N31.73 billion, while miscellaneous income and domiciled gas were N27.11 billion and N6.795 billion respectively.

In terms of federal government priority projects, national domestic gas development gulped N2.52 billion during the month, gas infrastructure development cost N2.977 billion, and the Brass LNG gas supply project did not get any funding.

In addition, frontier exploration services gulped N2.975 billion, renewables consumed N885 million, total spending on pipeline security and maintenance was N7.352 billion, and refinery rehabilitation, the main payment for salaries and utilities, was N8.33 billion. Furthermore, N83 million was spent on the Nigeria/Morocco pipeline.

Of all the cost centres during the month, only under-recovery and pipelines security were fully funded, leaving other projects like domestic gas financing, for instance, under-funded to the tune of N24.3 billion, gas infrastructure with a deficit of N17.853 billion, and frontier exploration by N14.652 billion.

Year-to-date, N1.304 trillion has been deducted for recurrent and capital expenditures by the NNPC, according to the document, while total distribution plus miscellaneous hit N1.653 trillion in July. However, a deficit of N1.250 trillion remained hanging.

Vandalism of NNPC infrastructure continued as a breakdown of the pipeline and management cost of N3.659 billion indicated that N2.708 billion was for security maintenance, pipelines, and facilities repairs were N392.950 million, while the NNPC’s strategic holding was N577.410 million.

The status of the NNPC’s payment to its Joint Venture cash call arrears obligation has remained unchanged since May at $3.22 billion out of a total negotiated sum of $4.689 billion since 2016. The outstanding balance remained $1.464 billion since May this year.

But added to JV cost recovery and priority projects, the document revealed that the total distribution, made by the corporation in January was N195.624 billion, it was N191.194 billion in February and hit N224.589 billion in March.

In addition, it was to N156.366 in April, but again hit a high of N320.315 in May and was N295.396 and N270.405 billion in June and July respectively.

In June the corporation had continued its regime of deductions from the federation account withholding N117.4 billion from the three tiers of government.

Two months ago, the NNPC told the nation that Nigeria was losing about 42 million litres of petrol to the activities of smugglers across the country’s borders, increasing Nigeria’s estimated daily consumption of 60 million litres to 103 million litres and worsening the subsidy payment regime.

The national oil company stated that the under-recovery or subsidy that the government pays on the product every month had begun to hover between N140 billion to N150 billion.

This, it said was making the corporation unable to contribute fully to the national coffers, the federation account, as the subsidy it pays has kept wiping out the gains made from rising international oil prices.

Group Managing Director of the NNPC, Mallam Mele Kyari, had also explained that with the exchange rate, the pump price of petrol should be N256 per litre in June, maintaining that if the NNPC was to sell at the going rate, and incorporating the current exchange rate, fuel would be selling for about N256 a litre.

A THISDAY check-in July showed that the NNPC’s payment to the federation account had declined by over 63 per cent in the first five months of 2021.

Emmanuel Addeh in Abuja

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