In an era where fuel pricing has become a critical issue for the Nigerian public, the Nigerian National Petroleum Company Limited (NNPC Ltd.) has come forward to clarify its position on the controversial subject of fuel subsidies. Contrary to widespread speculation, NNPC Ltd. has not paid any fuel subsidies in the last nine months, as stated by the company’s Chief Financial Officer, Alhaji Umar Ajiya, in a recent briefing held in Abuja.
Alhaji Ajiya emphasized that the company’s involvement in the pricing of Premium Motor Spirit (PMS) should not be misconstrued as subsidy payment. According to him, NNPC Ltd. has been managing the importation of PMS and absorbing the shortfall between the actual landing cost and the government-mandated selling price. This arrangement, he clarified, is strictly between the company and the Federation, with no direct financial transactions with marketers under the guise of subsidies.
“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. No marketer has received any money from us by way of subsidy,” Ajiya asserted. He further explained that while the landing cost of PMS might be higher than the selling price, the difference is treated as a financial shortfall, which the Federation reconciles with NNPC Ltd., sometimes through financial compensation.
Ajiya also highlighted the global commercial practices that are prevalent in the downstream sector, noting that NNPC Ltd. has been engaged in open credit agreements with PMS suppliers. These agreements, based on trust and established credibility, have allowed the company to continue importing fuel despite the financial shortfalls.
Supporting Ajiya's statements, Dapi Segun, the Executive Vice President of Downstream at NNPC Ltd., elaborated on the nature of the credit agreements with suppliers. He pointed out that the company’s ability to maintain such agreements reflects the strong relationship NNPC Ltd. has built with its suppliers over time.
“Concerning the outstanding to the suppliers, it is not in that magnitude that has been put out, it is lower than the $6.8 billion,” Segun noted. He explained that the outstanding amounts fluctuate based on ongoing transactions, emphasizing that the most important aspect is the company’s commitment to ensuring a steady supply of PMS across Nigeria.
In the face of economic challenges and public scrutiny, NNPC Ltd.'s clarifications aim to reassure the public that the company remains committed to transparency and efficiency in its operations. As the nation navigates these complex economic waters, the role of NNPC Ltd. in managing fuel pricing will undoubtedly remain a focal point of public interest and debate.
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