NNPC Confirms Receiving Payment from FG to Sell Petrol at half price of Landing Cost

The Nigerian National Petroleum Company Limited (NNPC Ltd.) has confirmed receiving payment from the Federal Government to sell petrol at half price of landing costs but clarified it has not paid fuel subsidies to anyone in the last nine months.

The Chief Financial Officer of the company, Alhaji Umar Ajiya, made the clarifications on Monday in Abuja.

Ajiya said NNPC Ltd. was only handling Premium Motor Spirit (PMS) importation shortfalls between the company and the federation.

“In the last eight to nine months, NNPC Ltd. has not paid anybody a dime as a subsidy; no one has been paid Kobo by NNPC Ltd. in the name of subsidy.

“No marketer has received any money from us by way of subsidy.

“What has been happening is that we have been importing PMS, which has been landing at a specific cost price, and the government tells us to sell it at half price. “So the difference between the landing price and that half price is a shortfall.

“And the deal is between the Federation and NNPC Ltd., to reconcile, sometimes they give us money, so there is no money exchanging hands with any marketer in the name of subsidy,” he said.

He stated that credit lines are prevalent in downstream businesses based on the worldwide commercial system.

He added that the company was in an open credit agreement with PMS suppliers in the past, with term-line contracts for payment.

Also, Dapi Segun, the Executive Vice President of downstream at NNPC Ltd., said that establishing an open credit agreement with suppliers spoke volumes about the credibility the national oil company had built over time.

“Concerning the outstanding to the suppliers, it is not in that magnitude that has been put out, it is lower than the $6.8 billion.

“Concerning the outstanding to the suppliers, it is not in that magnitude that has been put out, it is lower than the $6.8 billion.

“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.

“You would understand that it is not a static figure, and I wouldn’t want to quote any figure. When we make payments, it goes down, and when they supply products, it goes up.

“It is a dynamic way, but the most important thing is to ensure that we continue to make PMS available across the country,” he said.

This is coming after a report stated that President Bola Ahmed Tinubu approved a request by the Nigerian National Petroleum Company (NNPC) Ltd to use the 2023 final dividends due to the federation to pay for petrol subsidy.

TheCable in a report on Monday said Mr Tinubu also approved the suspension of the payment of 2024 interim dividends to the federation to help boost NNPC Ltd’s cash flow.

In addition, the report said the NNPC told Tinubu it will be unable to remit taxes and royalties to the federation account for now because of the subsidy payments, which it termed “subsidy shortfall/FX differential”.

Tinubu had, in his inaugural address on 29 May 2023, announced the removal of the subsidy to lift a major financial burden off the back of the government.

This development has caused hardship for many Nigerians with its attendant increase in the prices of goods and services.

Tinubu’s announcement sparked the increase in fuel price from N197 to between N480 and N570, which immediately triggered a rise in transportation fares and prices of goods and services in the country.

In July 2023, the petrol pump price was subsequently reviewed upward to N617/litre at various outlets of the Nigerian National Petroleum Company Limited (NNPC Ltd).

In recent times, there have been concerns that the government had partly reintroduced petrol subsidy, unannounced, to keep the pump price at N617 given the continued fall in the value of naira against the dollar and the price of crude oil in the international market.

But the government repeatedly denied it.