The Nigerian National Petroleum Company Limited has said that it will reconcile fuel subsidy deductions with the Federal Government, after stating that no fuel subsidy payments were made to marketers since January 2016.
The company stated this on Tuesday, July 4 when it posted a before and after fuel subsidy factsheet via their official account on Twitter.
It is important to also note that two days after President Bola Ahmed Tinubu announced an end to fuel subsidies in the country, Mele Kyari, the Group Chief Executive Officer of the NNPC Limited said the Federal Government owed it over $6 billion (N2.8 trillion). This is the exact amount that the NNPCL has paid to keep fuel cheap.
Meanwhile, in the Nigeria Development Update report from the World Bank, it was stated that the recent decision to remove the fuel subsidy marks a crucial initial step towards restoring macroeconomic stability, creating fiscal space, and improving growth prospects. The World Bank report stated that the removal of the subsidy will improve Nigeria’s fiscal position.
This is because it sets the foundations for a more resilient, faster-growing economy. However, the overall fiscal impact of the decision will depend on several factors, including how the Government plans to use savings from the fuel subsidy regime.
Other facts the NNPCL posted on Tuesday, were:
Payments
Before – No marketer is paid petrol subsidy by NNPC Limited as marketers buy below-cost price
After – Marketers will now pay the cost price as determined by the market
Debt burden
Before – Federation continuously in debt for subsidy payment
After – End of a burden, the beginning of a new era of renewed hope and opportunities
Settlements
Before – NNPC Limited pays suppliers either cash or delivers the equal value of crude oil volumes as settlement.
After – Crude oil swap deals will phase out
Supplies
Before – Suppliers import products on commercial terms for NNPC Limited on the back of their credit abilities.
After – NNPC Limited will no longer be the sole importer of petroleum products
What you should know
Mele Kyari had stated earlier that the fuel subsidy regime only benefitted about 10% to 15% of Nigerians because the regime was mainly helpful to those who belong to the elite or upper middle class. According to him, those who benefitted from the fuel subsidy regime were the upper class in society because they have a wide range of vehicles that are not used for mass transportation.
So who were those who got the subsidy? To who was it paid and why?
Don’t mind them. They now talk about “unknown” suppliers. Who are paid with crude swap deal. They don’t want to mention their names. Who is fooling who?
Why delay in payment since 2016 ?
Hope this is not another way to syphon government funds
I don’t think there’s an actual “delay” in payments.
I am not sure which year it started, but once independent importers stopped importing pms, essentially the manner in which the subsidy regime functioned was that the NNPC (which by default became the sole importer of pms) would import products at cost and sell to the marketers at the controlled pump price while absorbing the negative differential as “cost under-recoveries”.
In effect, the losses booked as “cost under-recoveries” on the NNPC’s balance sheets constitutes the amount of the fuel SUBSIDY. Accordingly, there are NO actual subsidy payments made to marketers, since marketers buy directly from the NNPC at the controlled pump price which is below the landing cost of imported pms. That’s basically what the NNPC CEO is referring to.
Meanwhile, the federal government was supposed to reimburse the amounts of such “cost recovery” expenditure to the NNPC (from budgetary allocations for fuel subsidy payments), but apparently never did so.
An intelligent response. My own worry is how then has NNPC been getting the funds to cover the cost under recoveries from 2016 till date? Is NNPC not a government structure? So if this said money us refunded to NNPC, where will it go to?
I think the FG used the Ways and Means to settle NNPC, that means asking the Central Bank to print money with which it paid NNPC.
So my brother what happened to the crude that was ,sent out as swap? How is it repatriated back to us? We gave out our crude which ordinarily was meant for local consumption to partner refineries abroad on a swap arrangement, is it that we go back to buy the same product after they are refined?
But what vice president said after the swearing in that federal government paid 220 billions us dollars in 2022 as subsidy why then mele kyari group managing director of nnpcl is saying since 2016 federal didn’t paid for subsidy what’s the meaning of this? Who is full?
Nigeria does not have (and did not have in 2022) $220 billion. Nigeria barely has less than $35 billion in its entire foreign reserves.
All i will say is that this subsidy of a thing, no one has a clear understanding of what it is, when you think you understand it you still encounter statements like this from government and you are left more confused,but what i know for a fact is, government shouldhave kept the subsidy and fixed the problem
I pray and hope all this subsidy of a this get to our benefit soon .
Only God knows how deep this fuel scam is. These guys are all criminals
They may be succeeding in confusing Nigerians in order to effectively hide the scam. Dia ris God o!
If there had no payments of fuel subsidy from FG since 2016 and FG claimed it pays about #400B monthly,pls who is lieing here? Buhari Govt. was an economic disaster
Truth coming out small small. Someone said subsidy was a scam. This report should be properly examined. Ha! Nigeria.
Who is NNPCL buying the crude oil from ? Who is it paying the money to ?
Who’s ship is doing the transportation ? Which refinery is it taking the crude oil to ?
Who does it pay refining money to ?
What happens to the other bye products from such refining activity ?
Who does it pay the subsidy money to ?
Does it buy crude oil from itself, sell it to itself, and also pay subsidy to itself ?
I just hope and pray that the masses of this country does not revolt against the establishment one day. The criminality is just too much and there seem to be no end in sight.
When you are looking for what does not exist, this is what you end up with, confusion and lies upon lies.
There has never been any real subsidy all this while.
Subsidy is high level scam.
Of course there’s subsidy. Otherwise, Nigerians would have been paying the same or similar prices for pms as our West African neighbors. Why do you think we import pms from the same refineries as our neighbors and we’re paying significantly lower rates?