The Nigerian National Petroleum Company Ltd. (NNPCL) has revealed that the amount spent as a subsidy on Premium Motor Spirit (PMS), also known as petrol, has surpassed N400 billion per month.
Mr. Mele Kyari, Group Chief Executive Officer of NNPCL, made the announcement on Friday in Abuja during the ongoing Final Cutover to NNPC Ltd. from being a corporation.
Kyari explained that NNPCL spent about N202 per litre of petrol consumed across the country as a subsidy.
He also stated that the NNPCL pumped approximately 65 million litres of PMS into the market daily to keep the country wet.
Kyari said the oil company would continue to meet its obligations by providing PMS for Nigeria, adding that the over N400 billion monthly subsidy had been a severe strain on NNPCL’s cash flow.
According to him, 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.
He said other private oil marketers stopped importing petrol into Nigeria due to the difficulty encountered in accessing the United States 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 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 per 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 N400 billion of subsidy every month,” he said.
Kyari said that the continuous funding of petrol subsidy by NNPCL had been ongoing without refunds from the Federal Ministry of Finance, Budget, and National Planning, even though the subsidy had been budgeted for in the Appropriation Act.
“There is a budget provision for it. 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 emphasize 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,” he said.
He expressed assurance that it would continue to support the country and deliver energy security.