The Nigerian National Petroleum Corporation (NNPC) has warned that it would not make any remittance to the Federation Account Allocation Committee in the month of May after spending N111.966 billion to subsidy petrol consumption in March.
NNPC’s Chief Financial Officer, Umar Isa, in a letter to the Accountant General of the Federation explained that the amount spent on subsidy in March would be net-off from oil and gas in April due in May leaving no balance for FAAC.
Isa also projected that NNPC would only be able to just N12.966 to FAAC in June also due to subsidy payment.
The letter to the Accountant General of the Federation read in parts:
“The Accountant General of the Federation is kindly invited to note that the average landing costs for Premium Motor Spirit for the month of March 2021 was N184 per litre against the subsisting ex-coastal price of N128 per litre, which has remained constant notwithstanding the changes in the macroeconomic variables affecting petroleum products pricing,” the letter read.
“As the discussions between Government and the Labour are yet to be concluded, NNPC recorded a value shortfall of N111.966,456,903.74 in February 2021 as a result of the difference highlighted above.
“Accordingly, a projection of remittance to the federation for the next three months is presented in the attached schedule.”
Supporting document to the letter showed that in May, net revenue to FAAC is projected to be N171.747 billion, with projecting that subsidy would cost N171.746 billion, leaving zero remittance as the net revenue to FAAC.
The projection for June, showed net revenue to FAAC at N105.337 billion, with NNPC projecting subsidy payment N92.371 billion, leaving just N12.966 billion as net revenue to FAAC.
NNPC also disclosed that in January, February and March, its net revenue to FAAC after value loss were N96.86bn, N64.16bn and N41.184 billion respectively.
The Minister of State, Petroleum Resources, Chief Timipre Sylva had in February warned that NNPC could no longer bear the rising cost of petrol subsidy calling Nigerians to be ready to bear the pains of increased petrol pump price as crude oil price climbed above $60 per barrel.
With no provision for subsidy in the 2021 Budget, NNPC had also warned that it was paying N120 billion monthly to subsidise petrol.
But the Chief Sylva: “Since we are optimizing everything, NNPC needs to also think about the optimization of product cost because as we all know oil prices are where they are today, $60.
“As desirable as this is, this has serious consequences as well on product prices. So we want to take the pleasure and we should as a country be ready to take the pain. Today the NNPC is taking a big hit from this. We all know that there is no provision in the budget for subsidy.
“So, somewhere down the line, I believe that the NNPC cannot continue to take this blow. There is no way because there is no provision for it. As a country, let us take the benefits of the higher crude oil prices and I hope we will also be ready to take a little pain on the side of higher product prices,” he had stated.