NNPC spends N5.35 bln on fuel subsidy in June despite deregulation
Despite the claim by the government that it has deregulated the downstream petroleum sector, the Nigerian National Petroleum Corporation (NNPC) said it spent N5.35 billion on fuel subsidy in June, this year.
The state-run oil firm said in a report that the amount is the deficit incurred as a result of importing finished products into the country.
NNPC uses the term under-recovery to qualify its deficit on the cost of importations versus income from imported refined petroleum products into the country.
The Petroleum Products Pricing Regulatory Agency (PPPRA) had in March announced a new pump price for petrol, which signaled the beginning of the elimination of subsidy on domestic fuel consumption in the country.
Since March, the regulatory agency has announced changes in pump prices of petrol more than three times to reflect the prevailing global crude oil prices.
The NNPC imports the bulk of petrol consumed in the country since many marketers have shown less interest in the market due to the controversy that heralded subsidy payment in the past by the government.
Also, many have attributed the high cost of importation and pump price of fuel to the devaluation of the local currency and dollar shortage in the country.
Prior to the announcement of the removal of subsidy on domestic fuel consumption, the NNPC had incurred N101.65 billion on under-recovery from fuel importations in the first three months of the year.
The NNPC data showed that it under recovered N43.31 billion in January, N20.68 billion in February and N37.66 billion in March.
The company had also posted zero deficit on the importations of petroleum products in the months of April and May, according to the report.
However, spokesman for the oil giant Kennie Obateru said the N5.35 billion under-recovery in June was due to the payment for stock held by marketers at the onset of the removal of subsidy by the government.
“Since the subsidy removal started with reduction in pump price, marketers have been paid the differential of the PPPRA verified stock they held and it is spread over a period of six months,” he said.