NNPC claims subsidising fuel importation with N383.2b, fails to give consumption rate

The Group Managing Director of the Nigeria National Petroleum Corporation, Maikanti Baru, on Thursday said the corporation has used $1.05 billion from the dividends of Liquified Natural Gas to augment daily shortages incurred in the pump price of Premium Motor Spirit, popularly known as petrol.

But the agency failed to explain the specific period covered by the $1.05 billion spending.

Baru, who appeared before a Senate Adhoc Panel probing the alleged application of $3.5 billion petroleum subsidy by NNPC, however, denied the existence of such fund in special accounts as reported in the media.

He explained to the lawmakers that $1.05 billion, which is equivalent of N383.2 billion, taken from LNG dividends, is domiciled in a special account with the Central Bank of Nigeria known as National Fuel Support Fund.

He added that the NFSF is meant for the purposes of augmenting loses incurred from petrol pump price of N145 per litre as against N185 per litre, which is the landing cost.

Baru’s words: “Based on available parameters from landing to transportation costs, the pump price of PMS is supposed to be N185 per litre as against the official price of N145 per litre, indicating shortage of N40 per litre.”

Speaking further, he said since subsidy is not appropriated for and pump price not adjusted upwardly, NNPC had no other option than to, in line with its establishment Act, section 7 sub section 4(b), defray the cost from its revenues.

He explained further that the $1.05 billion costs augmentation money came into being in October last year when Independent Marketers pulled out of the supply chain of importation of PMS into the country as a result of increase in landing cost without corresponding increase in pump price.

He added that the issue of subsidy or pump price increase can best be tackled by the National Assembly and not the NNPC, failure of which he said will make smuggling of petroleum products across Nigerian borders lucrative business by smugglers.

Baru said: “The N145 per litre pump price of PMS in Nigeria is the lowest when compared to N400 it is sold in Cameron, N350 in Ghana, N330 in Benin Republic, etc.

“As long as the product is sold at the lowest price in Nigeria, so shall it be attractive for smugglers to trade on across the borders.”

Baru however said he doesn’t know the daily consumption of the product in Nigeria presently, but disclosed that the consumption rate as at 2016 was 49 million litres per day and 53 million litres per day in 2017.

According to him, NNPC presently has 1.9 billion litres of PMS in stock, which can last the country for 39 days in case of any breakdown in the supply chain.