NNPC: The Landing Cost for Petrol is N1,200, But the Government Instruct Us to Sell At N600, It’s Not Subsidy.
The Nigerian National Petroleum Company (NNPC) Ltd has clarified that it is selling petrol at a price significantly lower than the landing cost but insists this practice should not be considered a subsidy.
Speaking to NAN in Abuja on Monday, Umar Ajiya, the NNPC’s Chief Financial Officer (CFO), stated that the company is covering what he described as a “shortfall” rather than providing a subsidy. Currently, petrol is officially priced at around N600 per litre, despite a landing cost of approximately N1,200 per litre. Ajiya also confirmed to Bloomberg that the NNPC has incurred N7.8 trillion in costs to cover this shortfall in the year’s first seven months.
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Although subsidies are generally understood as selling a product below its cost price, Ajiya pointed out that in official correspondence between the NNPC and the presidency, the term “subsidy” is frequently used to describe this shortfall. Earlier, TheCable reported that President Bola Tinubu approved NNPC’s request to use the 2023 final dividends due to the federation to cover this cost.
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During a media briefing on the company’s 2023 audited financial statements, Ajiya denied claims that the NNPC was paying subsidies, insisting that the company is merely offsetting the shortfall on petrol importation. He later told Bloomberg that the government owes NNPC N7.8 trillion ($4.9 billion) in subsidy-related debts from January to July 2024.
In his clarification to NAN, Ajiya emphasized that no subsidy payments have been made to any marketer in the past nine years, noting that NNPC has been the sole importer of petrol through contracts with suppliers.
“In the last eight to nine years, NNPC Ltd. has not paid anyone a single kobo as a subsidy,” Ajiya stated. “No marketer has received any money from us under the name of subsidy. What we’ve been doing is importing PMS at a specific cost, and the government instructs us to sell it at half that cost. The difference between the landing price and this selling price is a shortfall, which is reconciled between the Federation and NNPC Ltd.”
Ajiya did not, however, address how much of the $4.9 billion could have been added to the federation account if the NNPC was not covering the shortfall.
NNPC: The Landing Cost for Petrol is N1,200, But the Government Instruct Us to Sell At N600, It’s Not a Subsidy.
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