The Group Chief Executive Officer of the Nigerian National Petroleum Company (NNPC) Limited, Mele Kyari, has said that the N400 billion fuel subsidy payments made by the NNPCL on a monthly basis are draining the company’s resources.
This was made known by Kyari during the February 17 Official Cutover ceremony transforming NNPC to NNPCL in Abuja. Punch reports that Kyari said:
- “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/liter.
- “Our customers are here; we are transferring to each of them at N113/liter. That means there is a difference of close to N202 for every liter of PMS we import into this country. In computation, N202 multiplied by 66.5 million liters, multiplied by 30 will give you over N400 billion of subsidy every month.
- “But 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 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.”
A valid reason to end fuel subsidies
On February 7, Mele Kyari told Channels TV that as the sole importer of petroleum products into the country, the NNPCL is supposed to receive monthly allowances from the Ministry of Finance in order to finance fuel subsidies. But he wasn’t sure if this could be possible amid the country’s current fiscal realities.
However, the Federal Government has decided to remove fuel subsidies by June 2023, so, that the country can increase its revenues.
The decision to remove fuel subsidies by the Nigerian Government is a significant step towards addressing the country’s fiscal challenges. For many years, the government has been spending a considerable amount of money on fuel subsidies, which has created a huge dent on the country’s revenues.
This decision is aimed at increasing the country’s revenues and addressing other critical sectors like education, healthcare and infrastructure development that have been suffering from neglect.
Removing fuel subsidies by June 2023 will help the government save a significant amount of money, which can be used to fund other critical sectors of the economy. It will also encourage private sector investment in the oil and gas sector, which will ultimately boost the country’s economic growth.
However, the removal of fuel subsidies could also lead to an increase in fuel prices, which could have an adverse impact on the citizens. Therefore, it is important for the government to put measures in place to cushion the effect of the removal of fuel subsidies on the citizens.
NNPCL MD complaining of the 400BN naira monthly subsidy is similar to someone in a river and complaining he can’t remove the soap in his eyes. Imagine NNPCL has functional refineries won’t this 400BN be their profit.
Let’s stop making excuses for failures. The countries that have functioning refineries don’t have 2 heads..
We need you to come out clean on this humongous subsidy bill and what short and medium.term plans does NNPCL have to ensure we do not enrich few individuals through the subsidy arrangement any more
We need to know the quantum of PMS consumed in the economy and those taken across the border. It is despicable that Nigerians are still spending hours at fuel stations due to scarcity while the subsidy bill keeps rising. Who is fooling who? All attempts to probe the subsidy arrangement are always inconclusive. Few unscrupulous individuals are milking this country without repentance. They need to be stopped for the nation to grow.