Fuel Subsidy: NNPC To Withdraw ₦242.53bn From Federation Account

Nigerian National Petroleum Company Limited, NNPC, has said it will make withdrawal of N242.53bn from the Federation Account Allocation Committee account as subsidy for Premium Motor Spirit.

The said sum as contained in the firm’s latest presentation to the FAAC meeting in Abuja on Friday will be deducted this month, Naija News reports.

Although it described the proposed subsidy deduction as a value shortfall, NNPC noted that the fund would be recovered from February 2022 proceeds due for sharing in the March 2022 FAAC meeting.

In February 2022, the oil firm remitted no money to FAAC due to its huge fuel subsidy spending and subsequent deduction from the Federation Account, Naija News understands.

In early March this year, state governors lampooned the NNPC for not remitting any funds at last month’s FAAC meeting.

The Chairman of the Nigeria Governors’ Forum and Governor of Ekiti State, Kayode Fayemi, had queried how the oil firm was bold enough to declare profit when it had not been meeting its FAAC obligations.

Fayemi had disclosed this alongside other governors during the Nigerian Governors’ Forum session on natural resources at the Nigeria International Energy Summit 2022 in Abuja, Naija News reports.

He specifically pointed out that in the last Federation Accounts Allocation Committee meeting in February, the NNPC made zero remittance to the federation.

“We’ve just had the Federation Accounts Allocation Committee meeting a couple of days ago and the NNPC contributed zero to the Federation Accounts this month,” the governor had stated.

Meanwhile, industry operators had disclosed that unless the fuel subsidy regime is halted, the deductions might continue, as NNPC had been the sole importer of petrol into Nigeria for more than four years running.

The oil firm had also been shouldering the cost of subsidy on petrol all these years. The actual cost of the commodity is far higher than the approved N162-N165/litre pump price.

The President, Petroleum Products Retail Outlets owners Association of Nigeria, Billy Gillis-Harry, explained that the actual cost of petrol without subsidy was usually a little higher than that of diesel.

He stated that if not for subsidy, PMS would be selling around N550 to N600/litre going by the rise in crude price.

The approved subsidised pump price of PMS in Nigeria is between N162 to N165/la it, but oil marketers stated that the actual cost should be a little higher or about the same price of diesel had it been PMS was deregulated.

The PETROAN president further stated that the N3tn that was projected by the government as subsidy spendings in 2022 might double before the end of the year if the crude oil price continues to rise.

However, in its latest presentation, the NNPC said the December 2021 spending fall recovery on its importation of PMS amounted to N210.38bn.

“The recovery consists of December 2021 value shortfall of N176.48bn plus the outstanding value shortfall recovery of N33.9bn accrued over the 2021 year. The November 2021 spot arrears of N98.81bn is also outstanding.

“The estimated value shortfall of N242.53bn (consisting of N143.72bn for January 2022 recovery plus November spot arrears of N98.81bn) is to be recovered from February 2022 proceed due for sharing at the March 2022 FAAC meeting.”

FAAC also stated that its overall crude oil lifting of 8.13 million barrels (export and domestic crude)2021 recorded 2.21 per cent decrease relative to the 8.31 million barrels lifted in November 2021.

The oil firm said Nigeria recorded an average production of 1.31 million barrels in December 2021, adding that crude oil export revenue received in January 2022 amounted to $2.23m.