*set to license new oil importers
By Chesa Chesa
The Nigeria National Petroleum Company (NNPC) Limited on Tuesday justified the ending of petrol subsidy in Nigeria because it no longer has money to sustain it, having already lost over N2.8 trillion as a result of Federal Government’s inability to remit outstanding subsidy payments to the company.
Group Chief Executive Officer of NNPC Limited, Mele Kyari diaclsoed this to State House correspondents at the Aso Rock Villa shortly after he held a meeting with President Bola Tinubu.
He explained that the worrying queues that resurfaced at petrol stations are caused by confusion on the part of petrol marketers and consumers regarding the specifics of subsidy removal and its timing, but assured the public that the queues would disappear soon.
Kyari noted that NNPC as a commercial entity can no longer bear the burden of petrol subsidy, as its cashflow challenges are seriously affecting its financial obligations.
He also cleared the air that the company is not obliged to provide any palliatives to the citizens in view of the subsidy removal although he is every much aware that the Federal Government was doing something in that regard.
He said: “I am aware that government will act to bring succour and relief to our country people. I know this government is very sensitive and they will do this.
“There are engagements that are ongoing to bring into effect that component of it. So NNPC will not do anything because we are a commercial company. It will not come from NNPC. But I’m aware that government will do something around this.
“But the reality is that you cannot give what you don’t have. So, today the country doesn’t have the money to pay for subsidy.
“There’s incremental value that will come from it. But it is not an issue of whether you can do it or not because today we cannot afford it and they are not able to pay our bill.
“That comes to how much is the federation owing NNPC now? Today, we are waiting for them to settle up to N2.8 trillion of NNPC cash flow from the subsidy regime. And we can’t continue to do this.”
Kyari further explained that “six months after the enactment of the Petroleum Industry Act, Petroleum Motor Spirit (PMS) will be priced at its commercial value. So there will be no subsidies six months after the enactment on the PIA. That means by February 17th, 2022, there should have been no subsidy on PMS.
“Now the National Assembly and Government, in its wisdom provided for subsidy in 2022, despite the fact that the provision of the PIA terminated by 17th of February.
“But government can decide to spend its money anywhere it wants and it can bring succor and relief to its citizens. This is very typical. It happens all over the world. However, that provision in 2022 and also 2023 has not been funded by government.
“A greater part of it is supported by the cash flow from NNPC’s other businesses. Therefore, even though there is provision to the end of June, there is no financing even from the start.
“And since you can’t pay, you cannot expect NNPC to continue to carry it. And this has been the position that the NNPC has taken and what the President simply said is obeying the law and also the realities that the federation can no longer pay NNPC for the burden of subsidy that we are carrying.”
Explaining why fuel queues surfaced after the the pronouncement by President Tinubu, the NNPLC boss said: “Typically, consumers will rush the fuel station to fill their tanks. And that is why you’re seeing these queues. And also for marketers, they would like to see what exactly this means in the sense that, you know, so how are we going to sell the product if subsidy on PMs is removed and the combination of two is what you are seeing, the obvious dislocation of distribution. And we believe that this will go away very, very quickly.”
Mele further clarified that “this subsidy costs should have been money that will be given to the NNPC maybe on monthly basis or even on daily basis if necessary.
“However, since the provision of the N6 trillion in 2022 and the N3.7 trillion in 2023, we have not received no payment whatsoever from the federation. That means they’re unable to pay and will continues to support the subsidy from the cash flow of the NNPC.
“That is when we net off our fiscal obligations of taxes and royalty, there is still a balance that we’re, we’re funding from our cash flow and that has become very, very difficult and affecting our other operations.
“We’re not able to keep some of this cash to invest on our core businesses. And at the end result is that it can be a huge challenge for the company. And we have highlighted this severally to government that they must compensate NNPC, they must pay back NNPC for the money that we have spent on the subsidy.
“Fortunately also by virtue of the provisions of the law and also the, and the Appropriation Act 2023, it is no longer available for that funding and we are very convinced today that the country can no longer fund this subsidy bill and they will not be able to pay NNPC and therefore we are happy and pleased to hear Mr. President’s commitment to elimination of this subsidy because they can’t afford it anymore.
“And we will take necessary steps to ensure that we recover our costs from the market and also being mindful of the fact that, you know, a situation like this can lead to exploitation of customers.”
The CEO of the Nigerian Midstream and Downstream Petroleum Regulatory Authority, Farouk Ahmed, on his part said in other to ease the burden on NNPCL being the sole importer of PSM, it’s ready for issue licenses to interested persons to import petrol.
He however, urged marketers to open their stations and sell petrol to the public as NNPC has enough stock of the product.
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