The Group Chief Executive Officer of the Nigerian National Petroleum Company Limited (NNPCL), Mr. Mele Kyari, said on Wednesday that Nigeria would need about N4.2 trillion for fuel subsidy this year.
Kyari, who gave this figure when he featured in a programme on Channels Television, pointed out that the amount was based on the calculation of recent fuel distribution logistics.
He clarified: “We transfer products to oil marketing companies at N113 per litre so that we can establish a market price of N170. This was a year ago. That is the basis of all the estimates, now there are some adjustments that have brought us to the reality of the cost of vessels that I have mentioned over and over and that adjustment took us to a different level in terms of logistics. But what NNPC has kept is the transfer price from our landing location to the marketing companies.
“So, yesterday’s (February 6) data showed that these products will land in this country at N295 per litre, which means you have to sell it at N113 to the marketing companies so that they will be able to maintain the current subsidy regime that we are running. It means that you have N185 per litre of subsidy on every product that comes into this country.
“If you look at the average we have done of 63 million litres from January 2023 till date, and convert it to 365 days, that means you need N4.2 trillion to meet the fuel subsidy requirements for the country”, the industry expert added.
Kyari further maintained that as the sole importer of petroleum products into the country, the NNPCL was supposed to be receiving monthly allowances from the Ministry of Finance to finance fuel subsidies but expressed doubt about the possibility in view of the country’s current fiscal realities.
According to him, by law, there is a provision for N3.36 trillion for January to June ending the fuel subsidy regime for the country, which technically means that the Ministry of Finance is supposed to be issuing cheques to the NNPCL against this subsidy value on a monthly basis but it is not a real situation.
He further clarified: “We are a company owned by the state today, we have fiscal obligations from taxes, royalties and margin, which are all owned by the state. All these are because we have not diluted the ownership of the NNPC. So, what we can do is to hold back the fiscal obligation so we can use it to buy the products and sell them to the market.”
Kyari hinted that the company was working towards making sure that the rehabilitation of the nation’s refineries is completed as soon as possible and the Dangote Refinery commences operations to end the lingering nationwide fuel scarcity.
