The over N400bn spent monthly to subsidise Premium Motor Spirit, popularly called petrol, has been having adverse impacts on the cash flow of the Nigerian National Petroleum Company Limited, its Group Chief Executive, Mele Kyari, stated on Friday.
He, who disclosed this during the final cutover to NNPC Ltd from being a corporation, explained that the oil company was spending about N202 as a subsidy on every litre of petrol, adding that over 66 million litres of PMS were pumped daily into the market by NNPCL to keep the country wet.
Although he said the oil company would continue to meet its obligations by providing PMS for Nigeria, Kyari pointed out that the over N400bn monthly subsidy was painful and a drain on NNPCL’s cash flow.
NNPCL is the sole importer of petrol into Nigeria and has continued to play this role for several years running, bearing the huge cost of fuel subsidy.
Other private oil marketers stopped importing petrol into Nigeria due to the difficulty encountered in accessing the dollars required for the imports of PMS.
“Today, by law and the provisions of the Appropriation Act, there is a subsidy on the supply of petroleum products, particularly PMS imports into our country. In current data terms, three days ago, the landing cost was around N315/litre.
“Our customers are here; we are transferring to each of them at N113/litre. That means there is a difference of close to N202 for every litre of PMS we import into this country. In computation, N202 multiplied by 66.5 million litres, multiplied by 30 will give you over N400bn of subsidy every month,” the GCEO stated.
He said the continuous funding of petrol subsidy by NNPCL had been ongoing without refunds from the Federal Ministry of Finance, Budget and National Planning, despite the fact that subsidy had been budgeted for in the Appropriation Act.
“Bud there is a budget provision for it (subsidy). Our country has decided to do this. So, we are happy to deliver this, but it is also a drain on our cash flow, and I must emphasise this.
“For as we continue to support this, you will agree with me that it will be extremely challenging for us to continue to fund this from the cash flow of the company when you do not get refunds from the Ministry of Finance,” Kyari stated.
He added the NNPCL was working with the finance ministry, and it would continue to support the country and deliver energy security.
Fuel subsidy has been a topical issue in Nigeria, as many experts and local and international institutions have been calling for the removal of petrol subsidy.
But the major labour unions in Nigeria had kicked against the outright removal of subsidy on petrol, as they had argued that the Federal Government must make the refineries functional before halting subsidy on PMS.
Meanwhile, Kyari told stakeholders at the final cutover to NNPC Ltd that the assets of the national oil company were now worth $60bn, making it the largest firm in Africa.
He also disclosed that while the NNPC as a corporation posted about N803bn loss in 2018, it reduced the loss to N2.3bn in 2019 and for the first time in its history, it made a profit of N287bn in 2020, before shooting it up to N674bn in 2021.
“We believe we’ll do better in 2022 because you can’t do N673bn, which is about $2bn with $60bn assets company. We’ve seen firms with less than those assets making close to $9bn profit,” kyari stated.
The NNPCL boss also revealed that Nigeria’s crude oil and condensates production crossed 1.6 million barrels per day, going by the latest data published on Thursday.
He promised that the oil firm and its partners would continue to work hard to achieve the 1.8mbpd oil production quota approved for Nigeria by the Organisation of Petroleum Exporting Countries.
