Subsidy Removal Gone Forever
By Adewole Kehinde
On Thursday, an online medium had this headline: “Subsidy Returns as FG Reportedly Pays N169.4 Billion in August to Keep Petrol Price at N620/L” (Legit).
Another print medium says, “Subsidy Back As FG Pays N169.4bn In August” (Daily Trust).
Although they both relied on a document by the Federal Account Allocation Committee (FAAC), the Presidency has reaffirmed that there will be no increase in Premium Motor Spirit (PMS) pump prices across the nation, as widely speculated in the media.
The Special Adviser on Media and Publicity, Ajuri Ngelale, said President Bola Tinubu has promised to address the inadequacies along the supply, demand, and distribution value chain in the downstream sector as the prices of crude oil and foreign exchange continue to increase.
The Federal Government had a subtle agreement with oil marketers that, in order for them not to increase fuel prices further, they would cover the inadequacies arising from forex shortages and increasing crude oil prices in the international market.
Further findings show that the media relied on a document by the Federal Account Allocation Committee (FAAC) showing that in August 2023, Nigerian Liquefied Natural Gas (NLNG) paid $275 million as dividends to Nigeria via NNPC Limited. NNPC Limited used $220 million (N169.4 billion at N770/$) out of the $275 million to pay for the PMS subsidy.
The reporter claimed that the “NNPC held back $55 million illegally”.
Contrary to claims, the Nigerian National Petroleum Company Limited did not withhold the $55 million Nigeria Liquified Natural Gas dividend that was alleged to have been paid into the nation’s coffers.
In the month of May, when the NNPC was being owed N4.1 trillion for fuel subsidy by the federal government, the NNPC approached the federal government to provide the needed funds for the importation of petrol.
It was learned that at the time the NNPC Limited made the request, the administration of former President Muhammadu Buhari was winding down and preparing to hand over to the then-winner of the 2023 presidential election, Bola Tinubu.
Findings further revealed that, due to the fact that the government was not willing to plunge the country into another round of fuel scarcity crises, the government gave approval that the sum of N400 billion be given to NNPC as a loan to the federal government by the Central Bank of Nigeria.
The fund was used to defray some of the fuel subsidy debts owed by oil marketers.
Before the removal of the petrol subsidy, NNPC Limited had been the sole importer of petrol into Nigeria and has continued to play this role for several years, bearing the huge cost of fuel subsidy on behalf of the government.
Despite the huge budgetary allocation for subsidy payments under the administration of former President Muhammadu Buhari, no amount was actually paid to the NNPC Limited.
Other private oil marketers stopped importing petrol into Nigeria due to the difficulty encountered in accessing the United States dollars required for the import of Petroleum Motor Spirit (PMS).
The NNPCL, on behalf of the federation, spent about N400bn monthly and around N4.8trn yearly, a gesture that had been described as unsustainable.
It was further learned that in June this year, the amount needed to import petrol into the country was $700 million. The NNPC again approached the government for funding.
However, out of this $700 million, only $275 million, which was sourced from the NLNG dividend account, was made available to NNPC Limited by the government.
The entire $275 million was paid by the NNPC to oil marketers to enable the national oil firm to reduce the level of its indebtedness.
The amount requested by NNPC was $700 million. The government provided $275 million from the NLNG dividend account. So, the NNPC got the money, and that was what the company used to reduce the debt owed to marketers. No dollar was withheld by the NNPC. So, anybody saying NNPC withheld $55 million is telling a lie.
With the above explanation, the fuel subsidy is not back, and NNPC Limited is not taking NLNG dividends to pay any imagination subsidy.
Adewole Kehinde is the publisher of Swift Reporters and can be reached via 08166240846, email@example.com