The Nigerian National Petroleum Company Limited (NNPC Ltd) has brought to light that the Federal Government owes them a whopping N2.8 trillion in unpaid subsidy, a significant burden that the company has been covering from its own cashflow. Mele Kyari, the Group Chief Executive Officer of NNPC Ltd, made this revelation during a joint press briefing with Farouk Ahmed, the Chief Executive of the Nigerian Mainstream and Downstream Petroleum Regulatory Authority (NMDPRA), after a closed-door meeting with President Bola Tinubu at Aso Rock.
Kyari emphasized that NNPC cannot sustain the payment of the subsidy without the federal government settling its outstanding dues. The subsidy regime needs to come to an end, as the country’s current financial situation does not allow for its continuation. The budget for 2023 has provisioned for the subsidy until the end of June 2023.
Kyari explained, “Today, the country doesn’t have the money to pay for the subsidy. There’s incremental value that will come from it. But it is not an issue of whether you can do it or not because today we can’t afford it and they are not able to pay our bill. That comes to how much is the federation owing NNPC now.”
He further revealed, “Today, we are waiting for them to settle up to N2.8tn of NNPC’s cashflow from the subsidy regime, and we can’t continue to build this. Since the provision of the N6tn in 2022 and N3.7tn in 2023, we have not received any payment whatsoever from the Federation.”
Ahmed, the Chief Executive of NMDPRA, also addressed the issue, stating that his regulatory agency has been collaborating with the Federal Competition and Consumer Protection Commission (FCCPC) to ensure that oil marketers do not exploit consumers. He emphasized that there is currently no significant reduction in the availability of petroleum products at both supply and retail points in the value chain, which would warrant the emerging hardships and constraints.
Additionally, Ahmed mentioned that licenses will be granted to interested marketers for the importation of petrol. When asked about the criteria for granting such licenses, he stated that the same criteria given to importers of diesel and kerosene will be applied.
The challenges posed by the unpaid subsidy and the strain it puts on NNPC’s operations are a matter of great concern. The company has repeatedly highlighted the need for government compensation and repayment of the funds spent on the subsidy. The collaboration between regulatory agencies aims to protect consumers and ensure fairness in the oil industry. Granting licenses for fuel importation will provide opportunities for interested marketers, aligning with the established criteria for importers in the industry.
