The Nigerian National Petroleum Company (NNPC) Ltd has stated that it is not paying subsidies on petrol, but rather covering a “shortfall” between the landing cost and the official pump price.
The Chief Financial Officer Umar Ajiya told NAN in Abuja on Monday that the company is bearing the difference, estimated at N7.8 trillion in the first seven months of the year.
Ajiya emphasized that subsidy, typically defined as selling below cost price, has not been paid to any marketer in the last nine months. Instead, NNPC, as the sole importer of petrol, has been selling the product at half the landing cost, with the government directing the price reduction.
The NNPC CFO explained that the “shortfall” is reconciled between the Federation and NNPC, sometimes with financial support from the government.
Ajiya stressed that no marketer has received subsidy payments from NNPC, contrasting the situation with the common understanding of subsidy payments.
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“In the last eight to nine months, NNPC Ltd. has not paid anybody a dime as a subsidy; no one has been paid kobo by NNPC Ltd. in the name of subsidy,” Ajiya said.
“No marketer has received any money from us by way of subsidy.
“What has been happening is that we have been importing PMS, which has been landing at a specific cost price, and the government tells us to sell it at half price.
“So the difference between the landing price and that half price is a shortfall.
“And the deal is between the Federation and NNPC Ltd., to reconcile, sometimes they give us money, so there is no money exchanging hands with any marketer in the name of subsidy.”
The clarification comes amid ongoing debates about fuel subsidy and its impact on Nigeria’s economy. The NNPC’s position raises questions about the nature of the “shortfall” and the financial arrangements between the government and the national oil company.
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