The Nigerian National Petroleum Company Limited (NNPC Ltd.) has clarified that it has not paid any fuel subsidies in the last nine months.
In a statement Monday (yesterday, August 19), the company’s Chief Financial Officer, Alhaji Umar Ajiya, said in Abuja that NNPC Ltd. is only managing the shortfall in Premium Motor Spirit (PMS) importation costs between the company and the federation.
“In the last eight to nine months, NNPC Ltd. has not paid a single kobo to anyone as a subsidy,” Ajiya said. “No marketer has received any money from us in the name of subsidy. What has been happening is that we have been importing PMS, which lands at a specific cost price, and the government instructs us to sell it at a reduced price. The difference between the landing price and this reduced price is considered a shortfall. The arrangement is strictly between the Federation and NNPC Ltd., and sometimes the government provides funds to cover this gap. However, no money has been exchanged with any marketer under the guise of subsidy.”
Ajiya also noted that credit lines are common in the downstream sector as part of the global commercial system. He mentioned that NNPC Ltd. has been engaged in open credit agreements with PMS suppliers in the past, based on term-line contracts for payment.
Dapi Segun, Executive Vice President of Downstream at NNPC Ltd., added that the establishment of open credit agreements with suppliers highlights the credibility that the national oil company has built over time. Addressing concerns about outstanding payments to suppliers, Segun stated, “The outstanding amount is not as high as the $6.8 billion figure that has been reported. The key point is the ongoing relationship between us and our suppliers, ensuring we consistently meet our payment obligations. This is crucial for maintaining the supply of PMS across the country.”
Segun emphasized that the outstanding figures are not static, as they fluctuate depending on payments made and supplies received.
“It’s a dynamic process, but the priority remains ensuring the availability of PMS nationwide,” he concluded.
