Calls to scrap NNPCL intensifies over fuel subsidy crisis

Strident calls for the scrapping of the national oil company, the Nigeria National Petroleum Company Limited (NNPCL), have continued to rent the air following indication that it no longer remits funds to the Federation Account, which is distributed to the various tiers of government.

Despite being commercialised a couple of months ago to run as a profit-making venture, the national oil company has continued to be in the news for the wrong reasons. Although the oil firm declared profit for 2021, it claims to spend all its revenue on subsidies, which hinders it from contributing to the FAAC.

From subsidy payment on premium Motor Spirit (PMS), better known as petrol, to the daily consumption figures of the product and to remittances to the Federation Account, the oil firm has continued to have its claims countered by prominent Nigerians and industry experts, who believe it is short-changing Nigerians, insisting it has outlived its usefulness.

The latest punch was thrown by a former governor of the Central Bank of Nigeria (CBN) and vice chairman, Kaduna Investment Promotion Agency, Lamido Sanusi, who called for the unbundling of NNPCL, declaring that the national oil company was no longer a “cash cow” but a money pit. Sanusi, while delivering his keynote speech at the seventh edition of KadInvest, an annual investment summit organised by the Kaduna State Investment Promotion Agency at the weekend, said the claim by NNPCL that Nigeria consumes 66 million litres of fuel daily is simply “unbelievable”.

Again, last week, Kaduna State governor, Nasir el-Rufa’i, in a television interview called for the scrapping of the oil company to save the country from total economic collapse, arguing that the company cannot be declaring profit and at the same time claiming bankruptcy, since it spends all its income on subsidy. 

Ahead of the investment summit, el-Rufa’i had called for the immediate privatisation of NNPCL, insisting that the national oil firm had added nothing to the Federation Account this year except excuses that their revenues are being quelled by subsidy. Speaking on a television programme on Thursday, el-Rufa’i said NNPCL has created more problems for Nigeria and has failed in the oil and gas sector of the country.

The governor further explained that the government’s involvement has done no good, and should allow private investors to take charge, adding: “the electricity industry should as well be completely privatised”.

However, the NNPCL, in response to el-Rufa’i, through its Group General Manager, Group Public Affairs Division, Garba Deen Muhammad, said the governor’s statements were contradictory and surprising, because the facts were there for everyone to see. Muhammad said it was not true that NNPCL has not been remitting to FAAC, insisting that the revenue from the taxes such as the PPT was from the oil industry.

Sanusi and el-Rufa’i are vindicating the Comptroller-General of the Nigeria Customs Service, Col. Hameed Ali, (rtd), who recently argued that NNPCL could not convincingly justify the huge volume of petrol being consumed in the country daily to warrant the over N6 trillion subsidy. Speaking during a presentation to the House of Representatives’ Committee on Finance, Ali put the supply figure allegedly quoted by the NNPCL at 98 million litres per day, maintaining that the firm was over-supplying by at least 38 million litres daily. The oil company had put the figure at 68 million litres.

In its monthly presentation to the Federation Account Allocation Committee (FAAC) meeting on Sept. 23, NNPCL said it deducted N525.71 billion as a shortfall for the importation of petrol (subsidy) in August 2022.

The FAAC document showed that due to the subsidy payment, the oil company failed to remit any funds to the Federation Account for the eighth consecutive time. It further revealed that the national oil company spent N2.565 trillion on subsidy payments since the beginning of the year. In January, February, March, and April 2022, the petrol subsidy gulped 210.38 billion, N219.78 billion, N245.77 billion, and N271.13 billion, respectively. Also, in May, June, and July, the country spent N327.07 billion and N319.18 billion, and N448.78 billion, respectively.

This year, the Federal Government plans to spend up to N4 trillion on costly petrol subsidies due to high global oil prices. However, it plans to stop subsidy payment by June next year – with plans to spend N3.35 trillion as contained in the 2023-2025 Medium-Term Expenditure Framework and Fiscal Strategy Paper, (MTEF & FSP).

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