N4.2tn subsidy needed to meet Nigeria’s current fuel supply – NNPC

With the increase in fuel supply to tackle lingering scarcity nationwide, the country needs N4.27 trillion to meet its subsidy requirements, the Nigerian National Petroleum Company (NNPC) Limited said on Tuesday.

The Group CEO, NNPC, Mele Kyari, in an interview on The 2023 Verdict, Channels Television’s special election programme, disclosed that the the NNPC transfers products to oil marketing companies at N113 per litre to establish a market price of N170.

“That was one year ago. That’s the basis of all the estimates,” he explained.

According to Kyari, there are some adjustments that have “brought us to the reality of the cost of vessels.” And that adjustment, he said, took the NNPC to a different level in terms of the logistics.

He stated that NNPC has been unwavering on the transfer price from the “landing location” to the marketing companies.

“Yesterday’s data is that this product will land in this country at N295 to the litre. That means you have to sell it at N113 to the marketing companies so that we will be able to maintain the current subsidy regime that we’re running,” Kyari said.

“It means you have N185 per litre of subsidy on every product that comes into this country.

“Now, if you look at the average that we’ve done of 63 million litres January to date, and you convert it to 365 days, that means you need N4.27 trillion for you to meet the subsidy requirements for this country.”

With the NNPC as the country’s only importer of petroleum products, he said the law provides for N3.36 trillion for the January-to-June subsidy regime.

“That means technically, the Ministry of Finance is supposed to be giving us cheques against this subsidy value on a monthly basis,” Kyari stated.

“But it’s not a real situation in the sense that we’re a company owned by the state today. We have fiscal obligations because, ultimately, whatever money NNPC makes is from fiscal obligations – taxes, royalties and margin.

“Because we have not diluted the ownership of this company, all three belong to the state today. So, the only way NNPC can do this is to hold back the fiscal obligation, so that we can use that to buy the product and come and sell it to the market.”