NNPC Reveals Soaring Petrol Subsidy Expenditure, Highlighting Financial Strain on Federal Government
In a startling revelation, the Nigerian National Petroleum Company (NNPC) Limited disclosed that the Federal Government has disbursed a staggering sum of N1.82 trillion as subsidy payments within a span of five months. The NNPC’s monthly presentation to the Federation Account Allocation Committee (FAAC) on June 22, 2023, further indicated that the arrears on these payments have reached an alarming N3.73 trillion.
The national oil company reported that it disbursed N307.408 billion as petrol subsidy payment in May 2023 alone. The figures shared by the NNPC highlight an astonishing increase of 55 percent in petrol under-recovery during the January to May 2023 period, amounting to a total of N1.828 trillion. This represents a substantial surge compared to the corresponding period in 2022.
Breaking down the subsidy payments, the NNPC revealed that N274.769 billion was disbursed in January 2023, followed by N477.742 billion in February, N415.381 billion in March, and N353.130 billion in April.
The NNPC further disclosed that the outstanding arrears for subsidy payments stood at N3.735 trillion, which has been “carried forward” as of June 2023 FAAC.
In an effort to recover a portion of the subsidies, the NNPC managed to retrieve N495.497 billion from the Federal Government of Nigeria (FGN)/Central Bank of Nigeria (CBN) subsidy support. This recovery comprises N400 billion from the CBN and federal government subsidy support, along with $220,000 (80 percent of $275,000) as Nigeria liquefied natural gas (NLNG) dividend. The NLNG dividend is converted at an exchange rate of N434.08/$1, which is the FAAC-approved rate for May 2023.
Aside from the subsidy-related expenses, the NNPC generated N47.57 billion in May 2023 through domestic production sharing contract (PSC) crude oil and gas revenue.
In a separate development, the FAAC raised concerns over the NNPC’s failure to remit money into the federation account in May 2023 from crude sales, royalties, and taxes. The committee expressed its stance through a statement issued by Stephen Kilebi, the Director of Press and Public Relations at the Federal Ministry of Finance, Budget, and National Planning.
These revelations regarding the substantial subsidy payments and growing arrears shed light on the financial strain faced by the Nigerian government. The escalating petrol under-recovery, along with the accumulating arrears, emphasizes the need for effective and sustainable solutions to address the subsidy issue and ensure the stability of the country’s economy.
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