FG Owes NNPC N7.3 Trillion in Fuel Subsidy Debt Following Naira Depreciation

FG Owes NNPC N7.3 Trillion in Fuel Subsidy Debt Following Naira Depreciation

  • The Nigerian government reportedly owes the Nigerian National Petroleum Company Limited (NNPCL) about N7.3 trillion
  • The debt is an amount due in total subsidy payments to NNPC following the naira devaluation
  • The Nigerian government, via FAAC and NEITI, had stated that NNPC is indebted to it to the tune of $6.9 billion in remitted funds

The Nigerian government is the biggest debtor to the Nigerian National Petroleum Company Limited (NNPCL), with over N7 trillion in subsidy debts.

The amount is due to the naira devaluation, which officially exchanges at N734 per dollar.

NNPC management had revealed that the Nigerian government owed it about N4.1 trillion.

At the same time, it failed to remit about N2.8 trillion to the federation account, leaving a balance of N1.3 trillion owed to the national oil firm.

Read also

Currency outside banks rises to N2.2 trillion in Nigeria as Cardoso plans to end old CBN policies

Group Chief Executive Officer of NNPC, Mele Kyari Credit: Anadolu Agency / Contributor
Source: Getty Images

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NNPC spent N400 billion monthly on petrol imports in 2023

Before subsidy removal, NNPC was the only petrol importer and spent about N400 billion monthly importing the product on the country's behalf under an under-recovery arrangement.

Between January 2023 and May 2023, petrol under-recovery amounted to N1.828 trillion, 55% higher than the N1.27 trillion paid in the previous year.

According to Daily Trust reporting, NNPC received demand notices from the Federation Accounts Allocation Committee (FACC) asking for N2.8 trillion in payment for debts owed to the Nigerian government.

However, the NNPC said it could only pay FAAC once the federal government's reconciliation of the N7.3 trillion owed is finalised.

President Bola Tinubu had set up an inter-agency committee to fix the protracted row between FAAC and NNPC.

Read also

“N1K/$”: Naira new exchange rate to dollar, euro, pound as Senate confirms Yemi Cardoso as CBN gov

The Committee includes the Ministry of Finance, NNPC, the Nigeria Upstream Petroleum Regulatory Commission (NUPRC), the Federal Inland Revenue Service (FIRS), the Accountant General's Office, and the FAAC Post-Mortem Sub-Committee.

Reports say the President has since received the Committee's initial report.

NNPC fails to remit $6.9 billion to federation account

Legit.ng reported that NNPC utilised part of the $275 million accrued from NLNG dividends to the federal government for subsidy in August 2023

FAAC said that the NNPC reportedly withheld about $55 million of what has been paid into the national account, calling it unlawful.

In its Oil and Gas Industry Report, the Nigeria Extractive Transparency Initiative said the national oil firm failed to remit $6.9 billion to the Nigerian government.

NNPC also owes about $13 million in taxes to the Federal Inland Revenue Service (NNPC), while unpaid commission to NUPRC is about $8.25 billion as of December 31, 2022.

Read also

NEITI explains why NNPCL ignored Nigerian refineries, swapped N2.6trn crude for refined products

Importers lament forex scarcity to import petrol

The report comes amid looming petrol scarcity across the country following the failure of oil marketers to import petrol due to Forex scarcity.

Punch reports that many marketers have halted petrol imports due to scarcity of foreign exchange.

Analysts believe the development could lead to petrol scarcity across the country.

NNPCL shuns Dangote Refinery, swaps crude oil for loan with Others

Legit.ng earlier reported claim by a NNPCL source that the company signed crude oil contracts with some entities.

As contained in a Punch report, the development prevented the company from initially meeting Dangote's demand.

The Executive Director of Dangote Group, Devakumar Edwin, claimed in a Monday interview with S&P Global Commodity Insights that the NNPCL had committed its crude to other organisations.

Source: Legit.ng

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