The Nigerian National Petroleum Company Limited (NNPC Ltd.) has clarified that it has not paid any fuel subsidy to anyone for the past nine months.
This announcement came from the company’s Chief Financial Officer, Alhaji Umar Ajiya, on Monday in Abuja. Ajiya explained that NNPC Ltd. only manages the gap between the cost of bringing in Premium Motor Spirit (PMS) and what it gets in return from the federation.
He emphasized that during the last eight or nine months, no one has received any subsidy payment from NNPC Ltd. Not a single marketer has been paid anything under the label of subsidy by the company.
Instead, what has been happening is that NNPC Ltd. imports PMS at a certain price. However, the government requires them to sell it to consumers at a much lower rate. The difference between the higher price they pay for importing the fuel and the lower price they sell it at is referred to as a “shortfall.”
According to Ajiya, the only agreement related to these shortfalls is between NNPC Ltd. and the Federation. Sometimes, the Federation provides them with funds to cover the gap, but no direct payment is ever made to marketers as a subsidy.
Ajiya noted that credit lines are a normal part of the downstream oil business, as it follows global trade practices. He also mentioned that NNPC Ltd. had entered into open credit arrangements with PMS suppliers in the past. These agreements are based on terms and conditions that allow for payment at a later time.
